Bitcoin and ether options worth approximately $17 billion are set to expire on Friday on Deribit in one of the most significant monthly options expirations of the year.
There are 72,716 BTC call option contracts and 54,945 BTC put option contracts due for settlement, indicating a combined notional open interest of around $14.4 billion.
With the Federal Reserve convening today to determine U.S. interest rates and major tech companies set to report earnings this week, markets are preparing for a possible increase in volatility.
Options are derivative contracts that provide investors the right, but not the obligation, to buy or sell an underlying asset at a predetermined price before a specified date. A put option serves as protection against price drops while a call option offers the right to purchase, representing a bullish stance on the underlying asset.
Out-of-the-money (OTM) options make up 82.5% of open interest, demonstrating a clear inclination towards speculative positions. This indicates that while some traders may utilize OTM options to hedge against significant price movements, the overall positioning reflects an anticipation of increased volatility and notable market fluctuations.
Calls and puts are heavily concentrated in the OTM region, with significant call open interest around strike prices of $120,000 and $130,000, while puts dominate at $100,000 and $110,000.
With bitcoin trading around $113,000, the market is approaching the max pain level of $114,000. This is the price at which the vast majority of options contracts — both calls and puts — will expire worthless, resulting in minimal financial loss for options writers and maximum loss for options holders.
As bitcoin nears the max pain level, price movements often gravitate towards it in anticipation of expiry, driven by market makers’ hedging activities, though this remains speculative.
Ether options reveal 375,225 ETH in call open interest and 262,850 ETH in put open interest, aggregating to a notional total of $2.6 billion, with a max pain level of $4,110 in contrast to a current price of about $4,000.
According to Checkonchain, before IBIT introduced options in November 2024, Deribit accounted for nearly 80% of global bitcoin options open interest. That figure has since fallen to 44%, aligning with IBIT’s market share.
