As a seasoned crypto investor with several years of experience under my belt, I’ve learned to keep a close eye on options expiries and their potential impact on spot markets. Today’s Bitcoin options expiry event is significant, with around 23,700 contracts worth approximately $1.49 billion set to expire.
On July 12, approximately 23,700 Bitcoin options contracts worth around $1.49 billion will be in effect.
The impact of last week’s options expiry on spot markets was relatively minor, and this week’s event is expected to have a comparable effect.
Miners, the German government, and Mt. Gox redemptions have put significant pressure on them to decrease in value. (or) The value of these has been decreasing due to increased selling of Bitcoin by miners, the German government, and Mt. Gox.
Bitcoin Options Expiry
In simple terms, the number of put (betting on a decrease in BTC price) contracts versus call (betting on an increase) contracts for today’s Bitcoin derivatives is nearly identical with a ratio of 1.08. This signifies that there are roughly equal numbers of long and short positions, indicating a balanced market with bulls and bears closely matched. The potential loss point or maximum “pain point” for these contracts is set at $58,500 – slightly above the current Bitcoin spot prices.
Approximately $800 million worth of options contracts with a strike price of $100,000 are still active on Deribit, meaning they have not yet expired. Additionally, there is significant open interest for options above the $65,000 strike price, indicating that derivatives traders continue to hold bullish positions.
As a market analyst, I’ve observed that the crypto markets have bounced back slightly this week. Notably, the implied volatility for all major crypto derivatives has retreated significantly, reaching new lows not seen since March.
As a researcher studying the financial markets of cryptocurrencies, I would describe implied volatility (IV) as a calculation based on the price movements of future expiry crypto derivative contracts. It represents an estimate of the market’s expectation for the volatility of the underlying asset during the life of these derivatives.
“The unpredictable market fluctuations every quarter presented an excellent selling opportunity. This week, options sellers took advantage of this instability by increasing their positions significantly, ultimately contributing to a decrease in implied volatility for major terms.”
On July 12, approximately 24,000 Bitcoin (BTC) options are set to expire. The Put Call Ratio for these options is 1.08, indicating that put options hold a slightly larger share than call options. The Maxpain point, which represents the price level at which most options are likely to be exercised, is $58,500, and the total notional value of these options comes out to be around $1.4 billion.
— Greeks.live (@GreeksLive) July 12, 2024
As a crypto investor, I’m keeping an eye on the upcoming expiry of Ethereum options besides today’s Bitcoin ones. There are approximately 157,000 Ethereum options with a total notional value of around $490 million set to expire. The put/call ratio for these options stands at 0.37, indicating that call options are more popular than put options among traders. The max pain point for these contracts is pegged at $3,100.
Crypto Market Outlook
The feeling among investors regarding the market isn’t positive, according to Greeks Live’s observation. The total value of all cryptocurrencies has decreased slightly within the last 24 hours, sitting currently at approximately $2.22 trillion – a figure last seen in late February prior to the surge.
Bitcoin struggled to pick up steam and surpassed the $58,000 mark during Asian trading hours on Friday. However, it dipped below $57,000 before rebounding somewhat.
At the point of writing, Ethereum had retreated from its attempt to reach $3,200 and was once again trading below $3,100.
“Greeks Live observed that with U.S. stocks performing poorly as well, there’s widespread anticipation in the financial markets that a rate reduction in September will provide support.”
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2024-07-12 13:09