Monster Expiry: $100k Bitcoin Options Expiring This Friday

With a notional value of more than $3 billion, this will be the biggest expiry Deribit has seen to date, which in the light of the growing options market, will impact the spot market as well.


A record amount of Bitcoin options contracts are expiring on Jan. 29.

This monster expiry of 100k Bitcoin options contracts at a notional value of more than $3 billion will be the biggest expiry crypto derivatives platform Deribit has seen to date. However, the “uber bullish 29 Jan 52k strike needs the spot rate to advance for it to have any meaningful impact on the rest of the market; otherwise, it will decay to zero and have no delta impact,” noted Denis Vinokourov of Bequant.

The price of Bitcoin is currently seeing greens on the first day of the week, trading around $35,000. It’s to be seen if BTC will continue higher or range further after lack of momentum for two weeks following about a 30% pullback to just under $29k.

“As options become more influential in crypto, I expect increased volatility around expiry dates,” says trader AltcoinPsycho who anticipates deeper wicks in the days leading up to Jan. 29th expiry.

Interestingly, the pullback didn’t shake the market as only 61 contracts changed hands earlier last week.

“At current price levels, hedging large option notionals has a major impact on price,” noted trader and economist Alex Kruger.

Increased Institutional Interest

On Monday morning, open options contracts were worth around 250,440 Bitcoin with Deribit, which began offering the products in 2018, accounting for the majority 87.74% of it, as per Bybt. Options basically give the investors the right, not the obligation, to buy or sell the underlying asset at a specified price within a time period.

Interest in Bitcoin options has risen sharply over the past few months as the Bitcoin price broke past its previous ATH of $20,000 to climb to a new all-time high of $42,000 earlier this month.

In late June 2020, OI on bitcoin options contracts was a mere 147k BTC that surged to 265.81k BTC on Dec. 23, which was hit again just last week. The highest open interest of just over 21k BTC is for Bitcoin call options with a strike price of $52,000.

Given that Bitcoin options volume has exploded, from $4.1 billion in July 2020 to $15.36 billion in Dec. and already doing $23 bln in January, so far, the expiry can affect the spot market as well.

“It reflects just how volatile [Bitcoin] has become, even by its own standards, over the last couple of months,” said Craig Erlam, market analyst at Oanda. “The moves we're seeing on a daily basis now are incredible, so it's natural that options are being more utilized.”

Due to the complexity involved in options trading, it also indicates how much-sophisticated investors are involved in trading BItcoin. Also, the more institutional adoption, the more futures, and options volumes’ will grow.

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