BTC and ETH Options Worth $10.7B Expire on Friday

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As a seasoned analyst with over two decades of experience in the financial markets, I have seen my fair share of market volatility, and I can confidently say that this upcoming expiration date for Bitcoin and Ethereum options contracts is something to keep a close eye on. With such a significant amount of open interest concentrated in call options, it’s not hard to imagine the potential for a substantial move if the market swings in the right direction.

Prepare for potential market fluctuations in the cryptocurrency sector as large option contracts for Bitcoin (BTC) and Ethereum (ETH), valued at approximately $9.4 billion and $1.3 billion respectively, will expire on Friday, November 29, 2024, at 8:00 UTC on the Deribit exchange. This event could lead to increased volatility in the prices of these digital assets.

Based on Deribit’s data, approximately 45% of Bitcoin’s expiring options (valued at around $4.2 billion) are profitable (in-the-money), and 80% of these are call options. The majority of these profitable options are call contracts, which means their predetermined prices are lower than the current trading price of Bitcoin ($98,000). This situation allows option holders to secure substantial profits by exercising their options.

Conversely, approximately 55% or $5.2 billion of the options are considered out-of-the-money (OTM), while a staggering 98% equates to $4.1 billion in OTM puts – these contracts stand to gain if prices fall. These OTM puts primarily serve as hedges against potential price drops and are unlikely to exert significant influence.

Currently, market data indicates that the price where option sellers experience minimal payments, known as the maximum-pain price, is around $78,000. This is significantly lower than Bitcoin’s present value.

Regarding the expiration on Friday, it appears that a significant amount of open interest is centered around call options with a strike price of $82,000 and put options with a strike price of $70,000. According to the Max Pain Theory, we might expect the price to move towards this range between $70,000 and $82,000. However, this possibility seems rather improbable.

Historically, the regular monthly closures of options contracts have often resulted in significant fluctuations in prices. For instance, in October, a 3% drop was observed in Bitcoin’s value due to the expiration of around $4 billion worth of these options.

But as Bitcoin approaches the significant price level of $100,000, traders may decide to purchase additional Bitcoins to safeguard their holdings, which could lead to further increases in its value.

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2024-11-25 20:20