What Will Happen When $4.8B in Ethereum Options Expire?

A large amount of Bitcoin and Ethereum options contracts are about to expire. Moreover, these events often cause price volatility for the underlying assets.

There has been a significant shift in derivatives trading activity, with Ethereum options trading surpassing that of Bitcoin.

37,000 Bitcoin options are about to expire with a notional value of just over $1 billion. However, this number is eclipsed by the 256,000 Ethereum options that will also expire this month. Their notional value is a whopping $4.8 billion.

Industry analyst Colin Wu commented on the massive shift in derivatives trading.

“The Shanghai upgrade is coming, and the trading of Ethereum options has surpassed that of Bitcoin for the first time in more than a month.”

Ethereum Options Expiry

Ethereum options are derivatives contracts that allow traders to speculate on the price of ETH. They allow traders to buy or sell Ethereum at a specific price, the strike price, at a certain date of expiry. They are also more flexible than futures which have fixed expiry dates.

According to Deribit, Ethereum Open Interest (OI) stands at almost 2.6 million open contracts that have yet to be settled.

Ethereum Options Open Interest Chart by Deribit

Furthermore, there is a put/call ratio of 1.09 for Ethereum. The put/call ratio is calculated by dividing the number of traded put (short) options by the number of traded call (long) options contracts. A figure higher than 1 is bearish as more traders are buying short (sell) contracts than longs (buy).

The max pain point for Ethereum options is $1,800. This describes the strike price with the most open contracts. It is also the price at which the asset would cause financial losses for the largest number of option holders at expiration.

For Bitcoin options, things are looking a little more bullish with a put/call ratio of 0.51. This suggests there are more long contracts being bought than short contracts.

Additionally, the BTC max pain price is $28,000, pretty close to where the asset is trading at the moment.

Bitcoin Options BTC Open Interest Chart by Greeks.Live

Crypto Market Outlook

Crypto markets have remained flat on the day, with total capitalization hovering around $1.2 trillion. Furthermore, there has been very little movement in the crypto top ten aside from Dogecoin (DOGE), which has dumped 8.6% following Elon Musk’s Twitter meddling.

Ethereum is currently changing hands for $1,870, cooling from its mid-week and a seven-month high of $1,920.

Further downward pressure could be piled on when all those Ethereum options contracts start expiring this month.

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