Massive $11B Crypto Options Expiry on the Horizon as BTC Stability Persists

• Big News for Crypto Options: Over $11 Billion in bitcoin and ether options will expire on Deribit this Friday.

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• Both cryptocurrencies are currently trading well above their “max pain points.”

• An observer believes the market is unlikely to see major volatility ahead of the expiry.

Bitcoin (BTC) remains well supported as it holds above $40,000 approaching the final quarterly options expiry of 2023.

This Friday at 08:00 UTC, a staggering $7.7 billion worth of options tied to Bitcoin (BTC) and $3.5 billion of options linked to Ethereum (ETH) will expire on the Deribit crypto exchange.

“The total of over $11 billion marks Deribit’s largest expiry thus far, of which almost $5 billion will expire in the money, the largest amount ever as well, potentially resulting in above average hedging and trading activity,” said Luuk Strijers, the exchange’s chief commercial officer, told CoinDesk.

Options are derivative contracts offering the purchaser the right, but not the obligation, to buy or sell the underlying asset at a predetermined “strike” price at a later date, the expiry date. A call offers the right to buy; a put confers the right to sell. On Deribit, one options contract represents one BTC or one ETH. An in-the-money call option is one with a strike price lower than the market rate. For a put, an in-the money strike price is higher than the going rate.

The sharp increases in the bitcoin and ether price this quarter have investors adding upside exposure through calls. This explains the record notional open interest for in-the-money call options.

Clients have reportedly been rolling their positions into contracts expiring in January and subsequent months, with the process set to continue into Friday for the quarterly settlement.

“After the expiration, all eyes and trading activity will be focused on the upcoming ETF decision,” said Strijers. “The resolution of this could result in additional hedging and trading activity.”

The U.S. Securities and Exchange Commission is expected to make a decision on a bitcoin exchange-traded fund (ETF) by January 10th, which could be a catalyst for continued volatility in the historically bullish reward halving year.

Most open interest in concentrated in calls or derivatives offering upside protection. (Deribit)

The chart shows notional open interest for the BTC call and put options at various strikes expiring on Friday.

It also shows bitcoin’s max pain point (MPP), or the level at which options buyers stand to lose the most on expiry. The theory is that options sellers,

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