More than $6.51 billion in Bitcoin and Ethereum options will expire on November 24, which could signal increased trading activity.
A large number of Bitcoin (BTC) and Ethereum (ETH) options will expire on November 24, which could influence market dynamics. This comes in the wake of the US Department of Justice’s recent criminal charges against Binance and its hefty $4.3 billion fine.
Specifically, about 108,000 BTC options are approaching their expiration date. These options have a put/call ratio of 0.83, indicating a slightly greater inclination towards calls (betting on a price increase) than put options (betting on a price decrease).
The “peak pain point” for these options is $33,000, which is the price level at which the collective holders of the options contracts would experience the greatest financial loss. The total face value of these BTC options is a staggering $4.04 billion.
In parallel, approximately 1.2 million ETH options are also approaching expiration. These have a put/call ratio of 0.71, leaning even more towards call options. The maximum tipping point for these ETH options is set at $1,700, with the face value rising to $2.47 billion.
It is essential to understand the concept of “maximum pain” in options trading. It refers to the price level at which the total value of options (both calls and puts) expiring on a given date will cause the maximum financial loss to the option holders. Traders often use this concept to evaluate potential market moves such as options close to their expiration dates.
What does it mean?
When BTC options are about to expire, it means that the contracts, which give the holder the right but not the obligation to buy or sell Bitcoin at a predetermined price (the strike price) on a specific date (the expiration date ), are coming to an end. the end of its validity period.
On the expiration date, these options must be exercised or they will become worthless. If the market price of Bitcoin is favorable relative to the strike price, the option holder may choose to exercise the option to purchase Bitcoin at this lower price. Conversely, if the market price is below the strike price of a put option, the holder can exercise the option to sell Bitcoin at the higher strike price.
The imminent expiration of these options could result in increased trading activity and potentially unpredictable price movements in the market. Traders and investors are closely monitoring these developments, especially in light of the recent legal actions against Binance, which have already injected notable volatility into the market.
