$18 Billion in Bitcoin and Ethereum Options Expiring Today
The market enters the final days of 2024 with a new record for the largest Bitcoin options expiry in history. Today, a total of $18 billion worth of Bitcoin and Ethereum options contracts are set to expire.
For options traders and investors, exciting and unexpected developments may be on the horizon.
What do record cryptocurrency options values indicate?
According to Deribit data, this Bitcoin options expiration includes 88,537 contracts——Four times that of last week. Likewise, the total number of Ethereum options contracts expiring today is 796,021, which is 4.5 times the number from the previous week.
total value at maturity Bitcoin options Reached record $14.38 billionwhile Ethereum options total $3.7 billion. The higher the value of the option at expiration, the greater the trader’s profit expectations and the higher the need for risk hedging.
For Bitcoin, the highest pain price for options at expiration is $85,000, with a put (P/C) ratio of 0.69. In theory, a lower P/E ratio (below 1) reflects positive sentiment as more call options (bets on price increases) are purchased, indicating bullish expectations. However, Bitcoin’s price-to-earnings ratio has been trending upward in the last quarter of the year compared to historical data, which may indicate increased hedging sentiment.
“Demand for downside protection has been rising for weeks, likely in part because participants want to protect performance metrics for 2024. The put/call ratio for options open interest doubled on December 27, up from October of 0.35 to the current level of over 0.70,” said David Lawant, director of research at FalconX. commented.
Meanwhile, the highest pain price for Ethereum options contracts is $3,000, with a price-to-earnings ratio of 0.41. This proportion has changed from 0.97 at the end of Octoberreflecting growing bullish sentiment towards ETH.
As of this writing, BTC and ETH are trading at $96,300 and $3,300 respectively, well above the aforementioned highest pain prices. The maximum pain price is the price level at which all investors holding options contracts (including calls and puts) suffer the maximum loss (or “pain”) at expiration.
Some investors and analysts use maximum pain price as an indicator of potential price direction. The reason is that the market often tend to price Optimizing profits for option sellers (usually large financial institutions).
“With the market highly leveraged, any significant downside move could trigger a rapid snowball effect. All eyes are on this expiration date to define the narrative heading into 2025,” Deribit commented.
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