TL;DR

Crypto Options Bracing for Double Expiry: The crypto market faces two key options expiry dates this week. Today (May 24th) sees nearly $3 billion in Bitcoin and Ether options expire, offering a glimpse into investor sentiment.
Bitcoin Options: A Balancing Act with a Bullish Lean: Today’s Bitcoin options expiry reveals a relatively balanced market with a put/call ratio of 0.88, indicating a near-even split between bullish and bearish bets with a slight preference for calls. 
Ethereum Options See Bullish Charge: Ethereum options expiry reflects a more bullish sentiment compared to Bitcoin. The put/call ratio of 0.58 and a max pain point of $3,200 suggest more call options are expiring, indicating investor confidence in Ethereum’s price rise.

The cryptocurrency market braces itself as nearly $2.7 billion in Bitcoin and Ether crypto options contracts are set to expire today, May 24th. This event offers valuable insights into investor sentiment and potential price movements.

May 24 Options Data
21,000 BTC options are about to expire with a Put Call Ratio of 0.88, Maxpain point of $67,000 and notional value of $1.4 billion.
350,000 ETH options are about to expire with a Put Call Ratio of 0.58, Maxpain point of $3,200 and notional value of $1.3… pic.twitter.com/rftA9kBm4q

— Greeks.live (@GreeksLive) May 24, 2024

Bitcoin Options Expiry: A Balancing Act

While today’s expiry is significant, a much larger event looms on May 31st, with a staggering $4.3 billion worth of options expiring according to data from Deribit.

Analyzing today’s Bitcoin options expiry, we see a put/call ratio of 0.88, indicating a near-even balance between bullish and bearish bets, with a slight skew towards calls. 

The maximum pain point sits at $67,000, signifying the price at which most option buyers would incur losses. Open interest (OI) paints a more bullish picture. Long positions dominate, with a substantial $830 million concentrated around the $70,000 strike price. 

Higher strike prices like $100,000 also boast a significant OI of $843 million, reflecting a generally optimistic outlook among traders. However, put contracts see a notable presence at the $60,000 strike price with $388 million in OI, hinting at some hedging or bearish expectations.

Ethereum Options Expiry: Bulls Charge Forward

The options expiry frenzy extends to Ethereum as well, with a significant 350,000 contracts expiring, representing a notional value of $1.3 billion. 

The put/call ratio of 0.58 and a max pain point of $3,200 suggest a more bullish tilt for Ethereum, with more call options set to expire. This aligns with Ethereum’s recent surge, possibly fueled by ETF progress. 

Notably, Ethereum’s implied volatility (IV) reached a staggering 150% at one point, significantly higher than Bitcoin’s current IV. However, analysts warn that sustaining such high IV levels for both major coins might be challenging for the overall market structure. 

Calendar spreads, which involve buying and selling options contracts with different expiration dates, might be a more viable trading strategy in this environment. This is because calendar spreads can benefit from time decay, which is the erosion of an option’s value as it nears expiration.

Crypto Options Impact on the Market

The expiry of nearly $3 billion in BTC and ETH options today is unlikely to cause major disruptions in the spot markets. Total market capitalization has dipped slightly, primarily due to a pullback in Bitcoin’s price. 

Ethereum, on the other hand, has found some stability after yesterday’s SEC decision on spot ETFs. The performance of altcoins remains mixed, with some gaining and others losing ground.

It’s important to remember that options expiry events can introduce short-term volatility, but their long-term impact on the market is often debatable. Analysts will be closely monitoring today’s expiry and the upcoming, larger expiry on May 31st to gauge investor sentiment and potential price movements.

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Filed under: News - @ May 24, 2024 12:16 pm