Investment

Closing the sub- $ 60K per month will cause the $ 3.9B bitcoin options to expire


Bitcoins (BTC) The performance of 2021 was impressive, but traders waiting for a record moonlight are likely to be disappointed this week.

After peaking at $ 64,900 on April 14, a 27% correction of jaw fractures followed, causing the BTC price to drop to $ 46,000.

The unfavorable move wiped out more than $ 9 billion in BTC futures contracts with quick action that was previously unthinkable for most investors.

Although the price of bitcoin has returned to $ 5,800 in the last 48 hours, the bulls have not been able to surprise the bears in the options markets, as both sides are virtually balanced as of April 30.

Bitcoin price (BTC) in USD on Coinbase. Source: TradingView

The total open interest rate on bitcoin futures just three months earlier was $ 11 billion, although this record high was reached on April 13 at $ 27.7 billion. However, this shows how meaningful the recent impact of the price correction has been.

Meanwhile, the options markets operate on a different basis because the purchase agreement pays a premium in advance. Therefore, there is no strong risk of liquidation by the holder. While the call (buy) option provides the buyer with upward price protection, the put option does the exact opposite.

Those looking for a neutral to bearish strategy will therefore rely primarily on put options. On the other hand, call options are more commonly used for bull traders.

Although some exchanges offer weekly option contracts, monthly ones usually draw larger volumes. It will not be any different in April, when 72,000 BTC option contracts worth $ 3.9 billion expire at the current price of $ 54,500.

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Aggregated BTC options open interest after the expiration date. Source: Bybt

Notice how dominant the April options are compared to May or September. Although neutral to bull call options are dominant with a 41% higher open interest rate as of April 30, a more detailed analysis is needed to interpret these figures.

It is worth noting that not every option will trade after the expiry date, as some of these strikes now sound disproportionate, especially given that there are less than two days left.

Ultra bull options are now worthless

To understand how balanced these competitive forces are, we should compare calls and option sizes at each expiration price (strike).

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The summary possibilities of BTC from April 30 open up interest. Source: Bybt

Although these calling (buying) options from $ 80,000 to $ 120,000 may seem outrageous, they are commonly used “spread the calendar” strategy. As Cointelegraph explained earlier, the buyer could profit, even if BTC trades well below these strikes.

Extremely ascending options are now truly worthless, as there is no right to obtain a $ 80,000 BTC right after April 30th. The same can be said for options on neutral to bearish put at $ 48,000 or less.

Therefore, it is better to assess the position of traders by excluding these unrealistic strikes.

$ 54,500 represents a balanced situation

Neutral to bullish calling options of up to $ 58,000 represent 9,950 BTC contracts. This is the equivalent of $ 540 million in open interest at the current price of bitcoin. Another 3,100 would enter the scene from $ 60,000 and up, expiring $ 780 million.

On the other hand, bear put options fell to a total of 12,000 BTC contracts with $ 51,000, currently at open interest of $ 650 million.

If the price of bitcoin could fall below $ 50,000, another 3,850 option sales would also be used. This figure represents a potential open interest rate of $ 700 million for bear options.

At the moment, calls and handouts look practically balanced. Given that the difference between $ 100 million and $ 150 million is probably not enough to motivate both parties to put pressure on the price, this monthly expiration may be “no complications.”

The expiration of futures and options on Deribit, OKEx and Bit.com takes place on April 30 at 8:00 UTC. Futures and CME options take place at 15:00 UTC.

The views and opinions expressed herein are those of an opinion author and does not necessarily reflect the views of the Cointelegraph. Every investment and business move involves risk. You should do your own research when making your decision.



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