With crypto markets stuck in neutral, anticipation is building around a significant Bitcoin options expiry event on October 6th.
Approximately 14,000 BTC options contracts representing $400 million in notional value are set to expire that day. While substantial, this is smaller than the prior week’s expiry.
The maximum pain point for these options is $27,000 – where the most open contracts exist and losses would be greatest upon expiry. This is around $900 below Bitcoin’s current price.
The put/call ratio is relatively balanced at 0.89, reflecting similar open interest in bullish call and bearish put options. Since it puts a bet on falling prices, significant positioning in downside options remains.
Historically, October has seen upside price moves for crypto. However, decreasing liquidity and heavy put exposure have fueled theories that increased volatility could emerge this month.
Yet the exact impact of the expiration on Bitcoin’s spot price is uncertain, as option expiries often pass without dramatic effects.
Yesterday, BTC has retraced 3% from recent highs to trade around $27,700 currently. Meanwhile, 200,000 Ether options worth $330 million expire the same day, though with a similar put/call ratio.
While this option’s expiration may not directly sway prices, it contributes to building uncertainty in choppy markets lacking direction. The balanced puts and calls do signify traders are hedging both ways in these conditions.
Spot trading muted derivatives expiry events have taken on heightened significance for traders anticipating sharp breakouts. But the outcome remains a guessing game, keeping markets on edge.