What Will Happen After The Expiration Of $4.8B Worth Of Ethereum Options

What Will Happen After The Expiration Of $4.8B Worth Of Ethereum Options?

A bunch of Bitcoin and Ethereum options contracts is nearing expiration. This can cause fluctuations in the value of the underlying assets. Interestingly, there’s been a significant change in the volume of derivatives trading. Ethereum options trading has now surpassed Bitcoin options trading.

This month, 37,000 Bitcoin options with a notional value of just over $1 billion will expire. However, this number pales compared to the whopping 256,000 ETH options that will expire. Their notional value is an astounding $4.8 billion.

According to industry expert Colin Wu, this dramatic shift in derivatives trading is due to the upcoming Shanghai upgrade. He added that it’s been over a month since Ethereum options trading surpassed that of Bitcoin.

Ethereum Options Expiry

For those unfamiliar, Ethereum options are a type of financial contract that enables traders to predict ETH’s value. These options allow traders to purchase or sell ETH at a predetermined price (known as the strike price) on a specific date.

One of the perks of Ethereum options is their flexibility compared to futures, which have fixed expiration dates. As per Deribit, the total amount of outstanding Ethereum options (known as Open Interest or OI) is nearly 2.6 million open contracts that have yet to be settled.

Ethereum Options Open Interest Chart
Ethereum options open interest chart by deribit

In addition, ETH has a put/call ratio of 1.09. This ratio is calculated by dividing the number of traded put (short) options by the number of traded call (long) options contracts. If the ratio is above 1, more traders are purchasing short (sell) contracts instead of long (buy), which is typically bearish.

The maximum pain point for Ethereum options is $1,800. This is the strike price with the highest number of open contracts. It’s also the price at which most option holders would experience financial losses upon expiration.

Bitcoin options seem to be in a bullish state right now. This is indicated by a put/call ratio of 0.51, which suggests that more long contracts are being purchased than short ones. Moreover, the BTC max pain price stands at $28,000, which is pretty close to the current trading price of the asset.

Outlook For The Cryptocurrency Market

The crypto markets haven’t seen much action lately, with the total capitalization remaining around $1.2 trillion. Interestingly, there hasn’t been much movement in the top ten crypto assets. The only exception is Dogecoin (DOGE), which took an 8.6% hit following Elon Musk’s tweets.

Ethereum is currently trading at $1,870, a slight drop from its mid-week and a seven-month high of $1,920. There’s a possibility of further downward pressure on ETH’s price when all those options contracts expire later this month.

Also Read: Stablecoin Tether’s Market Cap Approaches All-Time High At $83B

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