Should We Worry about Next Expiry?

Endy Callahan

What is currently happening around the crypto market and options may make some participants feel worried. Many won’t feel strong enough and wish to find out what next week can bring to them. Analysts say that nine hundred and thirty million dollars in BTC options expire in a couple of days and this might become the main reason for many participants’ worries.

The press reminds that open interest on the crypto options contracts is expected to expire in a few days and we see figures move to nine hundred and thirty million USD. Now what bothers most is the events that we can expect from price action.

Experts pay great attention to the crypto options. They cannot ignore the importance of the futures market, either. Each week the industry receives reviews from the mass media sources that report on the most recent figures and results. The nearest expiry is just a dozen days away. And traders have started to worry because the price hasn’t surpassed the ten-thousand-USD mark, as it was expected by some participants.

All in all, nine hundred and thirty million USD is expected to expire next week. The mentioned figures reflect around seventy percent of its overall open interest. Even though it cannot indicate a market trend, we can try and analyze the data to predict what may occur next Friday. Analysts see a clear image of participants’ expectations while in most cases call options are good for those who prefer to remain bullish and apply related strategies.

Taken from Skew

The diagram illustrates what marks the figures have reached. That’s a one-hundred-percent increase in the last eight weeks. Deribit is the exchange accounting for seventy-seven percent of the options market.  And, at the same time, CME options appear to be now underwater.

Taken from CME

Next week’s expiry for the existing CME contracts is made up of nearly wholly call options, which indicated bullish trends. Seventy-five percent of this open interest my now be around eleven thousand USD. More than sixty-seven million USD will affect the market. However, in comparison to the three hundred million USD volume traded on CME futures, this may not be as significant. Participants should remember that each CME contract is worth five BTC.

Dominant Deribit Options and Their Impact

As we can see, Deribit options seem to be dominant. However, they are presently market neutral.

Taken from Deribit

The exchange holds fifty percent of the one-hundred-thousand BTC options. All of these are to expire next week. Participants are offered contracts and investors can gain access to their OTC block trading solutions. Additionally, the chart shows an image different from that shown on CME. We see more balance in there. On the other hand, the diagram above doesn’t demonstrate which part has a more visible and significant vested interest.

What Futures Markets Can Provide

Specialists admit that the futures market gives a detailed analysis and understanding of professional traders’ sentiment. A sharp contango shows that sellers are likely to request even more funds in the long run.

Taken from Skew

The current premium sounds bullish yet reasonable enough. What we see is different from what the market experienced last month – back then the forward price was lower. Participants predict and describe a bull market scenario. If the crypto trades over eleven thousand USD next week, this will activate almost fifteen thousand BTC. Every one hundred USD above this level will earn users 1.5 million USD.

Analysts remind us that one can benefit from a call option if trading is done above the strike level. Retail traders should follow another strategy and avoid shorting. Option markets can show a clearer direction while futures can’t. Here longs and shorts share different market exposure during each trade.