Despite Bitcoin (BTC), which has shown strength over the past few days, traders and investors should expect some volatility early in the European session on Friday, amid the expected expiration date of options.
However, the impact may be short-lived given the market will quickly adapt to the new trading environment.
What Traders Should Know About Today’s Options Expiry Date
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Deribit data shows that over $4.3 billion in Bitcoin and Ethereum (ETH) options have expired today. For Bitcoin, the expected expiry option is $3.5 billion, with a full 30,208.
At a Put-to-Call ratio of 1.23, the maximum pain level for today’s expired Bitcoin options is $114,000.
For Ethereum counterparts, today’s expiry ETH options are estimated at $806.75 million, with a full 177,398 yen.
However, unlike Bitcoin, today’s expired Ethereum options have a put-to-call ratio (PCR) of less than 1, with delivery bit data showing 0.99 at the time of this description. On the other hand, the maximum pain level, or strike price, is $4,500.
The biggest problem is the key metrics in crypto options trading. This represents price levels where most option contracts are worthless and expired. This scenario will inflict the greatest financial loss or “pain” to the traders who hold these options.
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In particular, today’s expired Bitcoin and Ethereum options are slightly higher than last week. On September 12, Beincrypto reported an expired option of approximately $4.3 billion, highlighting 29,651 BTC and 189,700 ETH contracts, with an estimated value of $3.42 billion and $858.2 million, respectively.
However, the main difference between the options that expired this week and the options that were seen last week is that this time, the expired option on Ethereum has a PCR of less than 1.
A PCR below 1 indicates that more call (purchase) options are traded than the Put (Sale) option. Therefore, this suggests bull market sentiment towards Ethereum and bearish sentiment towards Bitcoin, which has more puts than calls.
Nevertheless, a Bitcoin PCR of 1.23 and an Ethereum PCR of 0.99 suggest an almost balanced bet between traders between sales and purchase orders.
This balanced outlook is because we speculate whether the market will move higher if investors sell out or hedge their portfolio.
Note that options market signals are compensated for the record’s expiration date
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In hindsight, it is worth noting that options were re-licked ahead of Wednesday’s Federal Reserve rate decision.
This causes the implicit volatility of options contracts to rise while trading volumes are decreasing, suggesting market attention.
“The options have been re-ricked ahead of the Federal Reserve interest rate meeting, and the implicit volatility of options that expire tomorrow has increased significantly. Actual volatility has also increased significantly recently, showing a significant increase compared to last month, but actual trading volumes have instead been reduced,” said an analyst at Greeks.Live.
GlassNode highlights patience in highlighting the market’s patience of trading Bitcoin over 95% of its profit supply after the FOMC rally, exceeding 115,200.
“The futures show a short aperture, and the optional options will record 500,000 BTC over the September 26th expiration date. It is important to exceed 115,200. Meanwhile, there is a risk that the drop will return to 105,500,” GlassNode analyst wrote.
Meanwhile, it is worth noting that next Friday, September 26th, we will be seeing the biggest Bitcoin option in history. That day, the expected value of over $18 billion expired.
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At a Bitcoin price level of $118,000, there is more than $2.4 billion in money, with the biggest pain being $110,000. Put Open Interes is a minimum of $110,000.
So next week may be interesting. Margins usually encourage short-term price measures, so despite the sentiment, the market should not be surprised to see the flash.
In the meantime, however, traders must pretend to be volatility, as the concept of maximum pain often affects market behavior.
According to the maximum pain theory, the price of an asset tends to be drawn to this level as an option close to its expiration date.
As an option that is near-expired, Delibit’s 8:00 UTC, Bitcoin price, traded at $117,147 at the time of this writing, could be drawn to the biggest pain at $114,000. Meanwhile, Ethereum, which was trading at $4,590, could drop to $4,500.
Nevertheless, the market usually stabilizes immediately after the trader adapts to the new price environment. Today’s massive expiration dates allow traders and investors to expect similar results, which could impact market trends over the weekend.
