Bitcoin and Ether are set for a combined quarterly options expiry of nearly $18 billion on Friday, with the settlement potentially altering dealer hedging flows and changing short-term volatility.
About $15.9 billion of Bitcoin options and $2.1 billion of Ether options are due to expire at 8:00 UTC, according to Deribit CEO Luuk Strijers. Bitcoin was trading around $84,277, while Ether stood near $2,663.
The Bitcoin expiry represents about 37% of Deribit’s total BTC open interest, which was roughly $43.5 billion. Open interest measures the value of outstanding options contracts, with each contract representing one BTC or ETH.
Strijers said the Sept. 25 quarterly expiry is one of Deribit’s largest of the year. Bitcoin’s September options are skewed toward calls, with a put/call open-interest ratio of 0.69, suggesting traders have maintained substantial exposure to higher prices.
A call gives its buyer the right, but not the obligation, to purchase an asset at a predetermined strike price before expiration. Investors generally use calls when expecting the underlying asset to rise. Puts provide the opposite exposure and can be used to profit from or hedge against falling prices.
Crypto options trading has expanded considerably since 2020. Market participants increasingly combine calls and puts with spot and futures positions to trade around price direction, volatility and time decay, making major quarterly settlements closely watched events.
$75,000 Max Pain Level
Bitcoin’s max-pain price is another key level ahead of the settlement. Max pain refers to the price at which option buyers collectively face the greatest losses at expiration, although the theory that prices gravitate toward that level remains contested.
For Friday’s expiry, Bitcoin’s max-pain level is around $75,000, well below the spot price of roughly $85,500. Deribit called the level a potential “soft magnet” heading into the settlement.
The $70,000 strike has the largest open-interest concentration, and calls at that level are now deep in the money.
Strijers said 55% of the $9.4 billion in Bitcoin calls expiring Friday are currently in the money. Most puts have little value at current prices, meaning roughly one-third of the full $15.9 billion Bitcoin options book is in the money.
A call is considered in the money when the underlying asset trades above its strike price, while a put is in the money when the underlying trades below its strike.
Deribit Chief Commercial Officer Jean-David Péquignot said the distribution of open interest across strikes points to a potential price floor around $75,000.
Large call positions are concentrated at $85,000, $90,000, $95,000 and $100,000, including sizable call-condor structures that are becoming increasingly relevant with Bitcoin trading near $86,000.
On the put side, defensive positions are concentrated at $60,000, $70,000 and $75,000, creating several layers of downside positioning.
Dealer Flows Could Change After Expiry
The large settlement could bring increased volatility as dealers unwind hedges tied to expiring options.
Strijers said dealer hedging of short-call exposure may have helped Bitcoin move through the $80,000-$87,000 range. Dealers that are short calls typically need to buy spot Bitcoin as prices rise to maintain their hedges, potentially reinforcing an upward move.
That buying pressure can fade once the contracts settle. After expiration, the associated gamma and hedging flows roll off, potentially reducing the price-pinning effect and allowing short-term volatility to increase.
The change in positioning could ultimately lead Bitcoin to establish a different trading range.
Traders will also monitor price action around $85,000 and watch how existing positions are rolled into the October and December expiries. Rolling an options position involves closing or offsetting the current contract while opening a similar position with a later expiration date.
