The October $4.2B Bitcoin Options Expiration: Raising Short-Term Volatility?

As traders close profitable positions or alter them before the next expiry, this situation might increase volatility. The last major options expiry in September also saw a similar pattern, causing noticeable price movements.

Ahead of Friday’s expiry, Bitcoin’s put-to-call ratio stands at 0.62, signaling a more bullish sentiment. The ratio shows that for every 100 active call options, 62 put options are open. This bias toward calls is linked to Bitcoin recently nearing $70,000, its highest level since July.

Bitcoin’s max pain level-the price at which most options would expire worthless-stands at about $64,000. With Bitcoin currently close to $67,000, speculators say price might fall toward the max pain before the options expire. Ether, on the other hand, is trading near its $2,600 max pain, suggesting a more limited downside.

The crypto options market has grown significantly in the last four years. Billions of dollars worth of contracts are expiring each month. It’s still much smaller than the spot market, though. For example, the Bitcoin options set to expire on Friday represent a fraction of less than 1% of the total market cap of $1.36 trillion.

Looking ahead, the market may expand further as more institutions enter the space. The recent approval of options tied to spot Bitcoin ETFs by the SEC signals growing interest and potential for even more products in the future.