By
Steve Muchoki
April 25th, 2024
Bitcoin (BTC) options contracts worth about $1 billion are set to expire tomorrow. The open interest of the options contracts striking prices is set to be between $10,000-$11,000.
Bitcoin (BTC) options contracts worth $1 billion will expire on Friday. The contracts which are held across different exchanges. CME, OKEx, Deribit, and LedgerX according to financial research firm Skew all have options contracts.
Options are financial contracts that give the holder the right but not the obligation to buy or sell certain types of assets. Upon expiration, the holder of the option contract gets either positive or negative asset values when the expiration of assets occurs.
Traders can buy call options if they think the prices will go up on expiry. They can slow buy put options if they foresee that asset prices will go down on expiry. Analysts have weighed in on Friday’s option expiration. Some have concluded that the markets will most likely be influenced through a series of procedures known as pinning.
Some analysts think that the markets will decide the direction after pinning has occurred.
Bitcoin prices have stayed at the $9,000 mark for the past couple of months. At this time, Most traders are looking at most options striking prices at $10,000 for the Bitcoin (BTC) options contracts. The strike price of an option is the price at which the option will be settled.
Bitcoin (BTC) Options Contracts Striking Prices Likely to Be Bullish
Based on open interest, the striking prices are skewed higher in the bullish zones than in the bearish. Bullish options traders sell put options and buy call options. While bearish traders buy put options and sell call options.
Pinning determines the strike prices of the options. The options at play are referred to as open interest. Currently, the bulk of the open interest is between $10,000 -$11,000. This doesn’t mean that there isn’t an open interest on the flip side. There is still significant open interest to keep prices from breaking the $10,000 resistance.
Why this is important is the fact that the value of contracts at stake could determine the next breakout level that Bitcoin (BTC) prices will reach.
It is a known fact that Bitcoin prices can be heavily influenced by the positions held by options traders. This could be the case tomorrow as well.
Bitcoin (BTC) price volatility has also been lower than usual. This is the “quiet before the storm”. After this, prices will take off in one direction with a massive surge before Bitcoin will reach the next price levels.
Volatility will hit the markets soon. Many cryptocurrency traders are expected to roll over their short positions on Bitcoin options contracts till September.
Volatility Determines How Things Go
This will increase volatility and option prices. Traders tend to purchase more options when this kind of scenario occurs. So, Bitcoin prices will have a great time between now and September.
Many analysts think that the options expiry won’t have any impact on the cryptocurrency prices. They seem to forget that humans are in a time and place when the butterfly effect can occur to just about everything. This is happening in other financial markets. They are choppy at the moment.
Volatility will occur on a greater scale in the cryptocurrency markets. Until then, everyone will hold their bets close to their chests.