$1.06 billion or 114,700 Bitcoin options are set to expire at 8:00 AM UTC today. Traders are debating whether this will lead to volatility, and if so, in which direction.
Bitcoin Options Market Dynamics
Today marks the largest expiry of BTC options ever. There wasn’t even $1.06 billion of open interest in options until two months ago.
While the growth of options is exciting and signals institutional interest, market participants are focused on deciphering how this will impact the market.
Volatility has been sinking for months now, ever since Black Thursday.
Historically, BTC volatility cannot be suppressed for long. The expiry of 114,700 Bitcoin worth of options contract could catalyze volatility.
$7,000 and $8,000 puts, as well as $10,000 and $11,000 calls, have the most open interest, with a total value of 16, 700 BTC, or $154 million.
The put-call ratio measures the number of puts traders are purchasing versus the number of calls.
Since put options gain value when its underlying asset’s price reduces, a rising put-call ratio is a bearish indicator. This ratio has been trending down after a spike last week, however, implying there is positive sentiment in the options market. Read More