The crypto market braces for significant movements as nearly $3 billion in Bitcoin and Ethereum options expire today.
With substantial contracts and maximum pain points identified, how will these expiring options affect the market’s volatility?
Volatility Declines as Major Crypto Options Near-Expiry
According to Deribit data, approximately $2.34 billion in Bitcoin options are set to expire today. The maximum pain point for these options stands at $66,000, accompanied by a put-to-call ratio of 0.58. This expiration includes 36,732 contracts, which is notably fewer than last week’s 61,320 contracts.
Expiring Bitcoin Options. Source: Deribit
Additionally, Ethereum sees the expiration of 183,756 contracts with a notional value of $577.2 million. The maximum pain point for these contracts is $3,300, with a put-to-call ratio of 0.55.
Read more: An Introduction to Crypto Options Trading
Expiring Ethereum Options. Source: Deribit
The maximum pain point in the crypto options market represents the price level that inflicts the most financial discomfort on option holders. At the same time, the put-to-call ratio indicates a higher prevalence of purchase options (calls) over sales options (puts).
Crypto options trading tool Greeks.live provides some insights into today’s expiring options. They noted a nearly 15% drop in the Dvol Index from 62% to 48% since July’s monthly delivery, indicating a significant decrease in market volatility. Current implied volatility (IV) levels are among the lowest this year, with only three weeks below the current level.
Greeks.live analysts highlight that market volatility has declined as important events such as the Bitcoin 2024 Conference and FOMC meetings have landed smoothly. However, Adam, an analyst at Greeks.live, noted that the market currently lacks “hot spots,” and the Ethereum exchange-traded funds (ETF) will need to wait for steady positive inflows.
“The historical trend suggests that this quarter should be more optimistic overall, but with little short-term opportunity, it is the right time to buy some medium to long-term call options,” he added.
Bitcoin started the month at $66,342 but dipped to $62,000 during Asia’s midnight session today. At the time of writing, it has stabilized at around $64,714.
Meanwhile, Ethereum experienced a sharper decline. From $3,317 on August 1, it dropped to $3,097 before rebounding to $3,178.
Read more: 9 Best Crypto Options Trading Platforms
Historically, options contract expirations tend to cause sharp but temporary price movements. The market usually stabilizes shortly after. Ultimately, traders should stay vigilant, analyzing technical indicators and market sentiment to navigate potential volatility effectively.
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