With a monthly deal less than $ 60,000, Bitcoin’s $ 3.9 billion options expiration is not an event


Bitcoin’s (BTC) 2021 performance has been impressive, but traders waiting for a record-breaking monthly candle will likely be disappointed this week.

After peaking at $ 64,900 on April 14, it was followed by a staggering 27% correction that caused the BTC price to drop to the $ 46,000 level.

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This downtrend wiped out more than $ 9 billion in BTC futures contracts in a quick action that was previously unthinkable for most investors.

Although Bitcoin price rebounded around $ 5,800 in the past 48 hours, the bulls in the options markets couldn’t surprise the bears as both sides are practically even for April 30th.

Bitcoin (BTC) USD price at Coinbase. Source: TradingView

Total open interest in Bitcoin futures was $ 11 billion just three months earlier, despite that record high of $ 27.7 billion on April 13. However, this shows how significant the recent impact of the price correction has been.

In the meantime, the options markets operate on a different basis as the contract buyer pays the premium up front. Therefore there is no compelling liquidation risk for the owner. While the call option (purchase option) offers the buyer an upward price protection, the put option has the opposite effect.

Therefore, those looking for neutral to bearish strategies will primarily bet on put options. On the other hand, call options are more commonly used for bullish traders.

Although some exchanges offer weekly options contracts, the monthly ones usually draw larger volumes. April will be no different: 72,000 BTC options contracts valued at $ 3.9 billion at the current price of $ 54,500 expire.

Aggregated BTC options earn interest until they expire. Source: Bybt

Notice how dominant the options are in April versus May or September. While the neutral to bullish call options dominate with 41% greater open interest for April 30th, more detailed analysis is required to interpret this data.

It’s worth noting that not every option will trade when it expires, as some of these strikes now sound inappropriate, especially considering there are less than two days left.

Ultra bullish options are worthless now

To understand how these competing forces are balanced, one should compare the calls and set the option size at each strike.

April 30th aggregated open BTC options. Source: Bybt

While these $ 80,000 to $ 120,000 call (buy) options may seem outrageous, they are typically used in calendar spreading strategies. As explained by Cointelegraph, the buyer can benefit even if BTC trades well below these strikes.

The ultra-bullish options are now practically worthless as there is no benefit in acquiring the right to purchase BTC for $ 80,000 on April 30th. The same goes for the neutral to bearish put options at USD 48,000 and below.

Hence, it is better to evaluate the positioning of the traders by excluding these unrealistic strikes.

$ 54,500 is a balanced situation

The neutral to bullish call options of up to USD 58,000 amount to 9,950 BTC contracts. This corresponds to an open interest of USD 540 million at the current Bitcoin price. Another 3,100 would hit the scene at $ 60,000 and up, generating an option expiration of $ 780 million.

On the flip side, the more bearish put options have dropped to a total of 12,000 BTC contracts worth $ 51,000 that currently have an open interest of $ 650 million.

If the Bitcoin price falls below $ 50,000, an additional 3,850 put options will be exercised. That number equates to a potential open interest of $ 700 million for the more bearish options.

At the moment, both calls and puts seem practically balanced. Given that a $ 100 million to $ 150 million gap is unlikely to be enough to get either side to put pressure on the price, this monthly schedule can be “uneventful.”

The expiration of futures and options at Deribit, OKEx and Bit.com will take place on April 30th at 8:00 a.m. UTC. The CME futures and options take place at 3:00 p.m. UTC.

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading step is associated with risks. You should do your own research when making a decision.