Bitcoin Prepares For A Colossal Options Expiry
Quick Read
- Nearly 58,000 Bitcoin worth of Bitcoin options are due to expire on August 28.
- Bitcoin options open interest soars past $2 billion.
According to data by Skew, in just a week, the Bitcoin options market will see a massive Bitcoin options expiry, worth nearly 58,000 Bitcoin. While this expiry is not as large as June’s 114,700 BTC expiry, it is still fairly large.
Bitcoin options offer traders the ability to purchase or sell Bitcoin at a predetermined price (strike price) on or before the options expiry date. Option purchasers can chose between calls and puts.
Calls allow option holders to purchase Bitcoin at a specific price (strike price). If a trader purchases a call option and the price of Bitcoin rises past the strike price, the trader will be able to net the difference between the spot and strike price.
Puts allow traders to do the opposite. If a trader purchases a put and the price of Bitcoin falls below the strike price, the trader will be able to sell Bitcoin at the strike price and net the difference between the spot price.
Options allow traders to minimize their risk when trading Bitcoin. Traders pay a specific price for the option, also known as the option premium. If the price action does not follow what the trader anticipated, they can decide not to exercise the option, therefore minimizing their downside to just the premium they paid for the option.
Bitcoin Options Open Interest
As the expiry approaches, data by Skew shows that Bitcoin options open interest has surpassed $2 billion. Deribit continues to dominate, accounting for $1.7 billion of the total Bitcoin options open interest.
Open interest helps quantify market interest in a particular asset. The figure is calculate using the total outstanding contracts for the asset at the end of the trading day.
Cover image by Pepi Stojanovski on Unsplash
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