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November 27, 2022
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$ 3.6 billion Bitcoin options will expire today

Bitcoin options provide traders with a unique opportunity to buy or sell Bitcoin (BTC) at a set price. The price of an option contract varies according to the time of purchase, the strike price and the expiration day. The strike price of an option is the price at which the underlying asset can be bought or sold.

Source: Deribit

The figure above shows the distribution of Bitcoin options that will expire on April 30th. According to data from the Deribit crypto derivatives exchange, the “maximum pain price”Current where Bitcoin will expire is $ 54,000, which is very close to Bitcoin’s current price. At the time of writing, BTC is trading at $ 55,340.

The biggest pain point is the price at which the Bitcoin options buyer loses the most in the market.

In other words, the maximum pain price will cause investors who bought options previously to lose their time and opportunity cost to reinvest the option premiums. This is the price that makes most options worthless, because it is no different than buying or selling Bitcoin on the public trading market. However, option holders still need to pay for option premiums to secure their position.

BTC volume
Source: Open interest on the BTC option at strike price on the maturity date of April 30 via Bybt

The strike price for most call and put options on April 30 was around $ 55,000. Around this level, a total of 960.5 BTC call options and 771.4 BTC call options will expire. In general, the call / put ratio is 1.44, greater than 1, which proves that there are still more optimistic investors.

As can be seen in the figure above, there are still many investors with a large amount of open interest at an exercise price of around $ 80,000, and open interest reached 7.76 thousand BTC.

The number of open option contracts is the number of option contracts held by investors in all markets after the close of the previous trading day.

As the current price is moving around $ 55,000, it appears that Bitcoin is neither optimistic nor bearish in the short term and Bitcoin consolidation may continue for a substantial period of time.

Since bullish contract holders who have accumulated Bitcoin at a high strike price are unlikely to exercise the option. If they choose to execute this option, these investors will buy Bitcoin at a higher price, thus pushing the price up.

On the other hand, most of the open interest contracts are focused around $ 50,000 and $ 52,000, valued at 3.75 thousand BTC and 4.06 thousand BTC. Nor is there a high probability that bearish speculators will be willing to sell assets at this predetermined price.

However, it is important to note that the maximum pain price for May 7 option contracts is hovering around $ 56,000, higher than the current “maximum pain price” of $ 55,000. This proves that there are still more bullish investors who can push Bitcoin’s price to $ 56,000 next week.

Currently, the total amount of open positions for Bitcoin options is $ 13.54 billion, of which more than 88% is from Deribit, one of the largest crypto-derivatives exchanges in the world, and the total number of option contracts expiring is estimated at approximately 68,500 BTC.

Source: BlockchainNews

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