Bitcoin options are derivative contracts that allow traders to buy or sell an asset at a specific price on a specific expiration date. If the option owner decides not to buy or sell cryptocurrency, he is not obligated to do so. This makes options more flexible than futures, which require you to close a position regardless of profit or loss. The crypto market may experience increased volatility over the next 24 hours!
When will Bitcoin Options Expire?
February 2 is the last day of $1 billion worth of Bitcoin options contracts. Although this volume is slightly smaller than previous ones, it still has a significant impact on the market. Their notional value is $960 million – to 1 billion with more calls (long contracts) being sold than puts (short contracts). The maximum holder losses are observed at $42,000, although significant open interest remains at the $50,000 strike price.
Along with BTC, 230,000 Ethereum contracts worth $530 million are expiring on the same day, with a similar imbalance also tilting in favor of call sellers. Despite this, over the past 24 hours, the prices of Bitcoin and ETH have shown modest growth, with BTC returning to the $43,000 level and Ethereum trading around $2,300. However, given that Bitcoin has failed to gain a foothold above $44,000 since the launch of the ETF, the impact of option expiration on price movements remains uncertain.
How will The Market React?
As such, the market is preparing for the expiration of significant options contracts on both cryptocurrencies, which could impact the price. Despite recent gains, BTC and ETH are moving sideways, leaving questions about the extent to which expiration will impact their volatility.
This week, the price of Bitcoin consolidated in a fairly narrow range. At the time of writing, the main cryptocurrency is trading at $43,170.
It is quite difficult to predict how the market will behave on the expiration day of a large number of contracts, especially if any events are added that affect the news background. However, traders need to closely monitor the situation to ensure that increased volatility does not lead to unwanted stop loss orders or poor trading decisions. We should not forget that the impact of option expiration on the price of the underlying asset is short-term in nature. As a rule, the very next day, the market will return to its normal state, and strong price deviations will be compensated.
