Can Markets Recover as $2 Billion in Crypto Options Contracts Expire Today?

Friday, July 12, will see around 23,700 Bitcoin options contracts with a notional value of around $1.49 billion.

The options expiry event is of similar magnitude to last week’s which did not have much impact on spot markets.

They have been down-trending due to BTC selling pressure from miners, the German government, and Mt. Gox redemptions.

Bitcoin Options Expiry

Today’s batch of BTC derivatives has a put/call ratio of 1.08, which means longs and shorts are very evenly distributed, and the bulls and bears are matched. The point at which most losses will be made, or max pain point, is $58,500 which is a little higher than current spot prices.

However, there is still around $800 million in open interest, or contracts yet to expire, at the $100,000 strike price, according to Deribit. There is also a lot of OI at strike prices above $65,000, so derivatives traders remain bullish.

Crypto derivatives tooling provider Greeks Live commented that crypto markets have “rebounded modestly” this week, with all major term implied volatility “retreating sharply to new lows since March.”

Implied volatility (IV) is a measure of volatility derived from future expiring crypto derivatives contracts.

“Quarterly delivery overlaid with big volatility created a pretty perfect entry point for sellers, and options sellers built up their positions heavily this week, which served as an impetus to depress major term IVs,” it added.

July 12 Options Data
24,000 BTC options are about to expire with a Put Call Ratio of 1.08, a Maxpain point of $58,500 and a notional value of $1.4 billion.
157,000 ETH options are due to expire with a Put Call Ratio of 0.37, a Maxpain point of $3,100 and a notional value of $490… pic.twitter.com/rLvHLTPkrj

— Greeks.live (@GreeksLive) July 12, 2024

In addition to today’s Bitcoin options, there are 157,000 Ethereum options due to expire with a notional value of $490 million. These have a put/call ratio of 0.37 and a max pain point of $3,100.

Crypto Market Outlook

Market sentiment is not optimistic, Greeks Live observed. Total crypto capitalization has dipped a little over the past 24 hours to $2.22 trillion, remaining at levels not seen since late February before the rally.

Bitcoin has failed to gain momentum above $58,000 and fell below $57,000 during Asian trading on Friday before recovering slightly.

Ethereum attempted a shot at $3,200 but didn’t make it there and had fallen back below $3,100 at the time of writing.

“With U.S. stocks weaker today as well, the entire risk asset market is counting on a rate cut in September to come to the rescue,” commented Greeks Live.