As crypto markets maintain a state of relatively unsurprising steadiness, a more close examination reveals a significant and potentially impactful scenario on the horizon tied to Bitcoin (BTC) options. Coming up the pipeline on October 6, there’s a notable options expiry event, involving approximately 14,000 Bitcoin options contracts. With a total notional value hovering around the mark of $400 million, this event, whilst smaller than last week’s expiry, could be a game changer.
A term worth mentioning here is the “max pain” point, which is the price at which the majority of contracts exist and therefore, most losses are endured upon expiry. For these specific contracts, the “max pain” resides at $27,000, a figure narrowly lower than the prevailing Bitcoin price.
The distribution of the “put/call” ratio paints an interesting picture. At 0.89, it suggests an almost balanced split between sellers of long and short positions. A put option is essentially an anticipation of a fall in asset price, while a call option is a wager on an increase.
With a current positive price trajectory within the week and historically observed uptrends in October and Q4 in general, Bitcoin might be speculated to be in a good place. Yet, a sizeable positioning by traders in bearish put options and a shrinking liquidity pool stirs the pot with possible major market movements looming on the horizon.
In sync with the Bitcoin options, about 200,000 Ether (ETH) options contracts, sporting a notional value of $330 million, are simultaneously expiring. The similar put/call ratio here, 0.87, denotes an identical scenario as Bitcoin.
However, whether these option expiries will considerably affect spot markets is yet to be seen, considering they often occur without causing a significant impact. Currently, Bitcoin has experienced a 3% pullback from its recent surge to $28,500, trading around $27,700. Meanwhile, Ether has witnessed a 6.6% decline post-Monday peak and is trading approximately at $1,630.
In these instances, the fine line between caution and optimism is set to be the defining factor for traders as they navigate through these upcoming expiry events. This tug of war between optimism fueled by historical trends and caution borne by growing bearish put options presents a nuanced market perspective worth considering in the days ahead.
Source: Cryptonews
