The cryptocurrency market is set for significant changes as nearly $3 billion worth of Bitcoin and Ethereum options expire today.
With large contracts and maximum possible pain points identified, how will these expiring options impact market volatility?
Volatility Eases as Major Crypto Options Near Expiry
According to Deribit, there are about $2.34 billion worth of Bitcoin options expiring today. The maximum pain point for these options is $66,000, and the put-call ratio is 0.58. This expiration includes 36,732 contracts, which is significantly less than last week’s 61,320 contracts.
Additionally, Ethereum has 183,756 contracts with a notional value of $577.2 million awaiting expiration. The maximum pain point for these contracts is $3,300, with a put-to-call ratio of 0.55.
Read more: Introduction to Crypto Options Trading
The maximum pain point in the crypto options market is the price level that causes the greatest financial discomfort to option holders. At the same time, the put-call ratio indicates a higher prevalence of call options over put options.
Crypto options trading tool Greeks.live gives some insight into today’s expiring options. They noted a nearly 15% drop in the Dvol index from 62% to 48% since the monthly delivery in July, indicating a significant decrease in market volatility. Current levels of implied volatility (IV) are among the lowest this year, just three weeks below current levels.
Greeks.live analysts emphasize that market volatility has decreased as major events such as the Bitcoin 2024 conference and FOMC meetings have gone smoothly. However, Adam, an analyst at Greeks.live, noted that there are currently no “hot spots” in the market and Ethereum exchange-traded funds (ETFs) will have to wait for sustained positive inflows.
“The historical trend suggests this quarter should be generally more bullish, but with little near-term opportunity, now is the time to buy intermediate- and long-term call options,” he added.
Bitcoin started the month at $66,342 but fell to $62,000 during the midnight session in Asia today. At the time of writing, it has stabilized around $64,714.
Meanwhile, Ethereum has seen a sharper decline. From $3,317 on August 1, it fell to $3,097 before rising again to $3,178.
Read more: 9 Best Platforms for Trading Crypto Options
Historically, option contract expirations tend to cause sharp but temporary price movements. The market usually stabilizes shortly thereafter. Ultimately, traders must remain vigilant, analyzing technical indicators and market sentiment to effectively manage potential volatility.
