The volatility of the cryptocurrency market may intensify in the near future. According to data from Deribit, a total of over $15 billion in BTC and ETH options open interest (OI) will expire this Friday (29th), making it one of the largest expiration amounts in Deribit’s history.
Since rebounding from $63,000 on the 23rd, Bitcoin has been fluctuating around $70,000 and has seen a slight increase of 1.8% in the past 24 hours. The price of Ether has followed a similar trend, oscillating between $3,400 and $3,600 in recent times, with a 1.25% increase in the past 24 hours.
However, volatility may soon increase. Data from Deribit shows that a total of over $15 billion in options open interest (OI) will expire this Friday (29th), making it one of the largest expiration amounts in Deribit’s history. The options set to expire include:
BTC options: $9.5 billion (40% of total OI). Based on current market prices, it is expected that $3.9 billion will expire in-the-money, with a maximum pain price of $51,000.
ETH options: $5.7 billion (43% of total OI). Based on current market prices, it is expected that $2.6 billion will expire in-the-money, with a maximum pain price of $2,600.
In-the-money expiration refers to when option holders can profit upon expiration. For call options, this occurs when the market price of the underlying asset is higher than the strike price. The “maximum pain price” of an option is the price at which the buyer suffers the greatest overall loss (or the seller achieves the greatest overall profit) upon expiration.
A large number of in-the-money options expiring may drive up the prices and volatility of BTC and ETH. Deribit states that when a large number of options are set to expire in-the-money, option sellers (often institutions or professional traders) may engage in market operations to adjust their risk and avoid significant losses. This includes buying or selling the underlying asset to hedge their option positions. Considering that the open interest for call options is higher than put options, there may be a large number of buy orders that push up the prices.
Eliminating lower maximum pain attraction refers to the fact that since the maximum pain is the price at which the seller achieves the greatest overall profit, sellers have a strong incentive to push the token price close to the maximum pain on the option expiration date. However, if the market price has already deviated significantly from the maximum pain (BTC is nearly $20,000 away), the “magnet effect” towards that maximum pain will weaken, reducing the market’s tendency to pull the price back towards the maximum pain.
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