What’s interesting about this particular options expiry is that the current max pain price for the expiry is $54,000, which is very close to the current trading price. The max pain price is the price at which most options are rendered worthless, thus leading to the loss of the option premium for the options holders. Although, in this situation, options writers stand to gain.
On April 29, over $4.2 billion worth of Bitcoin (BTC) options contracts will expire. This expiry comes after Bitcoin has seen a recovery from $48,000 to currently trade in the $54,000 range. The total open interest of Bitcoin options currently stands at $13.54 billion, with over 88% being on Deribit, the largest crypto derivatives exchange by both volume and market capitalization.
Cointelegraph discussed this with Robbie Liu, market analyst at OKEx Insights — the research team at cryptocurrency exchange OKEx. He stated that “A huge expiry alone does not indicate that the market is bullish or bearish, but it did restrain the price upswing when the previous quarterly options expired at the end of March. And after the delivery, the downward pressure was reduced.”
In fact, when looking at the max pain curve, it’s evident that it’s reasonably flat at the bottom. This means that the overall economic impact of an expiry at $48,000 is relatively comparable to that of an expiry at $62,000. Shaun Fernando, head of risk and product strategy at Deribit, told Cointelegraph: “On expiry, with the removal of the max pain point, this could lead to an easier deviation from the 54k level.”
According to data from CoinOptionsTrack, the put-call ratio for the expiry is 0.69. The put-call ratio describes the trading volumes of put options in relation to those of call options. A put option buyer has the right to sell the underlying asset at a predetermined price on a specified date, while a call option holder has the right to buy an asset at a predetermined price on a specified date. The put-call ratio…