By
Chimamanda U. Martha
June 28th, 2024
Having a ratio that is higher than one means that more put options are being traded compared to call options.
Ahead of Friday’s quarterly Options expiry, the Bitcoin (BTC) put-call ratio has turned bearish. Today is scheduled for the quarterly options expiry for both outstanding Bitcoin and Ethereum (ETH) contracts, with a combined notional value of $10 billion set to expire on Deribit.
It is worth noting that this event is crucial as it represents over 40% of Deribit’s current open interest.
Bitcoin Price at Maximum Pain Point
According to Deribit end-of-June options data, a total of 107,000 Bitcoin options are expiring with a max pain point of $61,500 and a notional value of $6.6 billion. As it stands, the put-call ratio for Deribit’s Bitcoin options leading up to today’s expiry has surged to 1.66.
Notably, having a ratio that is higher than one means that more put options are being traded compared to call options. Furthermore, it reflects the volume of investors betting on or hedging against a price decline instead of an increase. Bitcoin was trading at $61,675.52 at the time of the writing, with a 0.88% increase within the last 24 hours.
The current price of the coin shows that it is still within the max-pain point ahead of today’s expiry. Bitcoin may eventually stay at a level where the most options will expire worthless. As a result, traders may just position themselves to gain from this alignment. In the long run, this will potentially translate to reduced volatility and increased market stability around the expiry point.
Deribit CEO Luuk Strijers strongly believes that “quadruple witching” and related volatility in the United States markets could potentially influence today’s large quarterly expiry. Such quadruple witching usually happens four times a year and is often targeted at the end of each quarter, especially when contracts for index futures, index options, options, and futures all expire simultaneously.
On the other hand, the large volume of contracts that are expiring today June 28 can impact spot prices. The unwinding of positions and the rolling over of contracts can turn into significant price movements.
Historical Bitcoin Options Expiry Figures
These expiries are historically common in the Bitcoin world.
On May 10, only about 18,000 BTC options were with a put call ratio of 0.64 and a Maxpain point set at $62,000. Also, the expiring BTC contracts held a notional value of approximately $1.15 billion. The put/call ratio of 0.64 suggested that more long contracts, or calls, would be expiring in comparison to the short contracts, or puts.
In April, the Bitcoin options expiry coincided with the fourth BTC halving event with more than 21,845 BTC options that expired. They held a notional value of $1.35 billion and a put-call ratio of $0.63. It is quite obvious that the put-call ratio for June is high compared to the other past months.
With the larger notional value, stakeholders are keen on discovering if similar price trends will be registered following the expiry.