Crypto Options Expiry this week is about the expected value of over $3.5 billion. A large amount of expiration options are expected to create short-term volatility in the market.
These expired options coincides with rising global uncertainty amid geopolitical tensions, so traders and investors need to prepare for the impact.
The Ethereum option expires to see $3.5 billion in Bitcoin in the Crypto market
With over $3.5 billion in Bitcoin and Ethereum options expire today, Deribit’s data shows that BTC contracts make up most of it. Today, 27,959 Bitcoin options agreements have expired, sending up to $2.9 billion in expected value to the drain.
The maximum pain level is $106,500, slightly above Bitcoin price at press time. Options traders experience the most losses at this level.
Meanwhile, these expired Bitcoin contracts are a put-to-one ratio of 0.91, highlighting the prevalence of call (purchase) options rather than (selling) options. This means that traders are bullish rather than bearish.
At the same time, 246,849 Ethereum contracts expire today, accounting for an expected $617.6 million.
According to data on Deribit, the Put-to-Call ratio for these expired options is 1.14. The maximum pain level or strike price is $2,650. In particular, Ethereum’s Put-to-Call ratio is above 1, indicating the prevalence of Put (selling) options rather than calling (purchase) options.
Ethereum’s Put and Call Options Distribution suggests a market slope to protect against a decline in ETH prices, based on a higher put-call ratio of 1.14.
At the time of writing, Bitcoin was trading at $104,342. Similarly, Ethereum was below the maximum pain level of $2,650. ETH had exchanged hands for $2,515 at the time of reporting.
According to Crypto Options Trading’s maximum pain theory, as an option close to expiration date, the price of the underlying asset tends to be drawn to the strike price. Here, the maximum number of options (calls and puts) is of no value and causes the largest financial loss (or “pain”) to the option holder.
This theory often rests on the assumption that market makers or large institutional players (smart money) on the other side of options trading can affect the price of the underlying asset through trading or hedging activities. Their actions push prices towards the biggest problem.
It arises as a profit for the market manufacturer if the option is not enabled, as it becomes useless.
Ethereum’s upward flow is strong towards expiration date
Greeks.live analysts emphasize bearish domination, as seen by multiple traders shifting to buy puts for protection. Deribit points out that the ETH upward flow is heading towards its expiration date.
“The ETH Upsideflow is heading for its expiration date. Will traders continue following it after Friday, or is this a place to cool off?” Delibitt posed.
This contrasts with Ethereum’s Max Pain Point, indicating potential volatility given that the effectiveness of options often causes price fluctuations as traders adjust their positions. This is especially true when the flow defies the expectations of maximum pain.
“The group appears to be split in the direction of the market. The bears dominate the conversation as multiple traders have moved to purchasing for protection.”
Analysts at Greeks.Live try to explain the Put Protection Strategy that appears among traders hedging for downside risk.
According to analysts, traders have bought put spreads and protected puts, strategically placing themselves after months of bullish sentiment.
The high volatility environment is creating an attractive opportunity for Put Protect as we anticipate two standard deviation events and key price wicks from unexpected news catalysts,” they added.
Catalysts in this respect Includes US-China trade transactions, Recent economic indicators such as US CPI inflation data and development of the Israeli-Iran War.
According to JPMorgan, the Middle East escalation could derail the Fed’s push against its 2% inflation target.
Disclaimer
In compliance with Trust Project guidelines, Beincrypto is committed to reporting without bias and transparent. This news article is intended to provide accurate and timely information. However, we recommend that readers independently verify the facts and consult with experts before making decisions based on this content. Please note that our terms and conditions, privacy policy and disclaimer have been updated.
