TL;DR
- Options Expiry and Market Volatility: Approximately $1.79 billion in Bitcoin and Ethereum options are expiring today, sparking expectations of increased market volatility.
- Bitcoin and Ethereum Contracts: 20,679 Bitcoin contracts, worth around $1.31 billion, are set to expire today. The put-to-call ratio is 1.19, with a maximum pain point of $62,000. 142,583 Ethereum contracts, totaling over $483.84 million, will also expire today.
- Insights and Trends: Deribit analysts noted interesting transactions, including shifts in options positions based on Kraken’s communication about Mt. Gox creditors’ repayment.
An estimated $1.79 billion in Bitcoin and Ethereum options are scheduled to expire today, leading to anticipation of increased market volatility. Investors are paying close attention to this development, especially with the upcoming introduction of spot Ethereum exchange-traded funds (ETFs).
Deribit’s latest data shows that 20,679 Bitcoin contracts are set to expire today, amounting to around $1.31 billion. Despite being lower than last week’s 23,832 contracts, this figure remains significant. The put-to-call ratio for these expiring contracts is 1.19, with a maximum pain point of $62,000.
The “max pain” in the cryptocurrency options market is when holders feel the most financial distress. Moreover, the put-to-call ratio indicates a greater prevalence of buying options (calls) in comparison to selling options (puts).
Ethereum Options Expiry
There are a whopping 142,583 Ethereum contracts set to expire today, totaling a staggering $483.84 million in notional value. The put-to-call ratio for Ethereum options stands at 0.37, while the maximum pain point is $3,150.
Deribit’s analysts have provided valuable insights into the options market this week. Notably, they observed that Kraken’s communication regarding Mt. Gox creditors’ repayment influenced one fund’s decision. This fund shifted its December 85,000 Calls to an August 65,000 straddle, aiming to capitalize on gamma exposure in either direction.
Gamma in crypto options trading refers to the speed at which an option’s delta adjusts with a $1.00 price movement in the underlying asset, indicating the degree of price exposure risk associated with the options position.
Deribit also highlighted other notable transactions, including the purchase of August 70,000 calls funded by December 90,000 calls. Furthermore, the anticipation of spot Ethereum ETF trading on July 23 has fueled a strong rally for ETH. However, the spread between BTC and ETH narrowed from 15% to 8%.
Bitcoin and Ethereum Market Trends and Investor Sentiment
Analysts have observed a trend since last week. A joint report by BlockScholes and Bybit suggests that the anticipation of Ethereum ETFs may have influenced ETH derivatives differently from BTC.
Additionally, BlockScholes’s Senti-Meter Index, which gauges investor risk preferences based on fund rates, yields, and volatility, indicates a more positive outlook on ETH compared to BTC.
Historically, options expiration has often led to brief, intense price swings. Nevertheless, markets usually settle down soon after. Traders need to be careful, carefully studying technical indicators and market sentiment to manage potential volatility successfully.
