Bitcoin and Ether Options Worth $3.6B Set To Expire On Friday

Options traders are keeping a close eye on their clocks as roughly 26% of open positions on Deribit, the leading crypto options exchange, are set to expire at 8am UTC on Friday.

Luuk Strijers, chief commercial officer at Deribit, told The Defiant that roughly 85,000 open contracts for BTC worth $2.3B and 700,000 ETH contracts worth $1.3B will expire today.

Strijers said twice as many ETH traders are long the asset compared to those who are short, with Ether’s “max pain” level currently sitting at $1,800 — meaning a closing price of $1,800 would result in the largest number of options expiring worthless.

Roughly two and a half times as many BTC traders are long versus short, with Bitcoin’s max pain point being $27,000.

With ETH currently trading at $1,805 and BTC at $26,450, it appears many traders could still suffer sizable losses.

Options are financial derivatives that allow traders to purchase the right to buy or sell an asset at a given price until a fixed expiry date. Traders risk only the option premium paid, enabling leveraged bets with limited capital. However, options elevate the potential for both risk and reward, meaning options traders can quickly rack up sizable losses if they are not careful.

Strijers added that implied volatility (IV) is at “rock-bottom” for both markets. Similar market conditions recently preceded a significant bullish move.

“We saw a similar rock-bottom IV situation in Jan this year followed by a big spike afterward,” Strijers said.