The Crypto Market Prepares for Record Options Expiry
The cryptocurrency market is gearing up for a significant event as a record $18 billion worth of options contracts are set to expire, causing traders to brace for potential volatility.
Understanding Options in Crypto Trading
- Options allow traders to speculate or hedge against price movements.
- A call option grants the right to buy an asset at a specific price.
- A put option provides the right to sell under similar terms.
Bitcoin (BTC) Options Expiry
Data from Deribit reveals that nearly 150,000 Bitcoin contracts, valued at $14.17 billion, are involved in this expiry event. The Put-Call Ratio stands at 0.69, indicating bullish sentiment among traders betting on higher prices. The Max Pain level is identified at $85,000.
Ethereum (ETH) Options Activity
Ethereum options are also witnessing significant activity, with 1.12 million contracts expiring, totaling over $3 billion. The Put-Call Ratio for Ethereum options is at 0.41, reflecting a bullish market outlook. The maximum pain price is identified at $3,000.
Market Outlook and Potential Volatility
Deribit highlights that the current bullish sentiment in the crypto market is evident in the year-end options expiry, but uncertainty looms large. Fluctuations in volatility measures like the Deribit Volatility Index (DVOL) and vol-of-vol indicate the possibility of sharp price swings. The firm warns that with the market heavily leveraged to the upside, any significant downside move could trigger a rapid snowball effect.
