$5.5 Billion Worth of Bitcoin Options Expire on Friday

Key Takeaways

  • Bitcoin call options worth $2.6 billion and put options worth $2.8 billion will expire on Friday, March 26.
  • A large Open Interest volume threatens to push this value to the maximum pain price at the time of expiration.
  • The long-term strategy of institutional investors and fresh buying pressure could limit the size of the correction.

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Bitcoin options worth $5.5 billion in notional value are set to expire on Friday, threatening a drop to the maximum pain price of $44,000. 

Bitcoin Options Set to Expire

Quarterly and monthly Bitcoin options, primarily traded on Derebit, will expire on Friday, Mar. 26. Those contracts have an Open Interest volume of $5.5 billion and strike prices between $4,000 and $120,000

Options contracts buyers purchase call or put options from sellers by paying a premium, thereby limiting their downside risk while allowing for maximum appreciation. Sellers are liable to buyers’ financial gains, while they also retain the entire premium in case of adverse price movements for buyers.

A higher volume of call orders above $48,000 and put orders below $44,000 place the maximum pain point at $44,000. This marks the strike price with the least rewards for all options buyers.

Max. pain for Bitcoin options contract expiring on Mar. 26. Source: Deribit Insight

Options buyers begin to book call yields by opening a short position of the same size, while sellers look to approach the maximum pain price, raising the possibility of price reaching that point at expiration. 

Bitcoin’s consistent bullish trend has produced corrections four times out of the last nine options expirations, with consolidations in the other four and a bullish reaction only in July 2020.

However, quarterly options expirations in June, September, and December 2020 were relatively less volatile compared to other monthly options. In fact, the relevant values rose 77% and 85% after the last two quarterlies.

Bitcoin price chart with options…

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