$930M in Bitcoin Options Expire Next Friday

Open interest on Bitcoin options contracts expiring next Friday amounts to $930 million, but what price action should be expected? Much attention has been paid to the Bitcoin investment platform options and futures market and each week crypto media reports on new record open interest figures being achieved. As the date of another futures and options expiry approaches, traders are becoming anxious due to the fact that the Bitcoin (BTC) price has consistently failed to surpass the $10,000 mark.

To date, more than 100,000 Bitcoin options totaling $930 million are set to expire on June 26. This figure represents nearly 70% of Bitcoin’s entire open interest. On June 15, the Bitcoin price pulled back to $8,900, leading investors to question whether professional traders have turned bearish as the June 26 expiry date approaches.

Although open interest doesn’t allow one to predict a market trend, it is possible to gain more insight by analyzing additional data such as the put/call ratio. This indicator provides a clear picture of investors’ sentiment as call options are mostly used for bullish strategies.

The June 26 expiry for the current CME contract consists almost entirely of call options, hence bullish positions. Seventy-five percent of such open interest is now sitting at the unlikely scenario of $11,000 and higher-level expiries.

This leaves $67 million worth of call options potentially impacting the market, which, when compared to the $300 million average daily volume traded on CME futures, is unlikely to have any meaningful impact. Also, investors should keep in mind each CME contract entitles 5 BTC.

Deribit holds 50% of the 100,000 BTC options set to expire on June 26, and unlike CME, Deribit offers contracts starting from 0.10 BTC. Institutional investors are also able to access Deribit’s over-the-counter block trading solutions.

The above chart tells a slightly different story from CME, as strikes with a higher probability are more balanced between call and put options.

There is roughly 9.5K BTC open interest on both calls and puts. This amounts to a $180 million notional set to expire, although it does not indicate which side has a more substantial vested interest.

If Bitcoin somehow manages to trade above $11,000 at expiry, this would activate another 14,900 BTC in unaccounted option contracts. Every $100 above that level would bring call option buyers another $1.5 million in profits.

One should keep in mind that a call option would only benefit its buyer if trading bitcoin with profit above its strike level. Meanwhile, retail traders should avoid shorting such an important resistance for derivatives structures.