Bitcoin Headed for One of the Largest Options Expiries of the Year

Bitcoin derivatives traders are facing one of the largest monthly options expiries this year as markets remain unsettled, even as tensions cool in the Middle East, Deribit Chief Commercial Officer Jean-David Péquignot told Decrypt.

Part of the reason this expiry is so large is because there’s been a general increase in Bitcoin derivatives activity, he said.

“BTC options contract volumes in Q2 surged approximately 25% above the past year’s average, reflecting a growing institutional derivatives market,” Péquignot said. “ETH options activity, meanwhile, remained relatively stable.”

Of the current $40 billion in open interest on Bitcoin options on Deribit, approximately $15 billion worth of that notional value is set to expire Friday. Péquignot added that the max pain point Friday would be if the Bitcoin price dropped to $102,000, with a put-to-call ratio of 0.73.

Bitcoin was recently trading at about $107,600, roughly flat over the past 24 hours.

That means that if Bitcoin falls to $102,000, the largest number of contracts expiring would be worthless. The put-to-call ratio refers to the split between traders buying puts, or contracts that speculate the BTC price will decrease, and calls, or ones that bet on the price rising before the contract expires.

Considering this ratio over the past 30 days, Péquignot said traders seem to be only slightly pessimistic about Bitcoin.

“Low open interest in perps and fairly depressed Bitcoin implied volatility and skew are indicative of limited expectations for sharp price movements going into Friday’s expiry,” he said, referring to a big drawdown in open interest after the U.S. fired airstrikes on Iranian nuclear facilities over the weekend.

But Bitcoin seems to be gaining some resilience because of geopolitical uncertainties. Bitcoin implied volatility has sunk below 38, according to Deribit. That’s the lowest it’s been since October 2023. Meanwhile, Ethereum’s implied volatility has mostly been stuck in the 60 to 80 range for the past three months.

“Ethereum’s higher implied volatility signals potential for larger moves,” Péquignot said. “Ethereum’s stronger skew suggests traders are hedging against or speculating on larger price moves, treating ETH as a higher-beta asset tied to DeFi and altcoin trends.”

Jag Kooner, head of derivatives at crypto exchange Bitfinex, agreed that volatility around Friday’s expiry will likely be muted—except perhaps during New York trading hours. He also said there’s a chance Friday’s expiry could create favorable conditions for traders in the week ahead.

“Post-expiry, if (the) price breaks out of the current range and ETF flows stay strong, we could see fresh directional momentum into the weekend,” he told Decrypt, adding that things could get especially interesting if Bitcoin retests $110,000.

“Once we get above the $110k mark for Bitcoin, fresh positioning coming into the market after that happens becomes more important to decide intermediate market direction,” he said.

Markets showing increased put volume—especially a lot of contracts with strike prices below the current market price—would indicate a temporary downside,meaning traders are expecting a retrace.

“Similarly, strong spot flows with more volume around OTM calls would indicate a stronger chance of a proper all-time-high break,” Kooner said, referring to Bitcoin inching towards its all-time high of $111,814.

Edited by James Rubin