- Over $1 billion worth of the Bitcoin options market is due to expire Friday.
- Open interest continues to soar prior to the massive expiry.
After days of declining price action, Bitcoin’s sudden move downwards triggered a wave of long liquidation across crypto markets, The Crypto Associate reported.
However, an arguably more significant event is developing as over $1 billion worth of Bitcoin options market is due to expire Friday. According to Skew, a cryptocurrency analytics platform, over 114,000 Bitcoin worth of Bitcoin options is due to expire on June 26.
Bitcoin options offers buyers the ability to buy or sell Bitcoin at a specific price on or before the option’s expiry date.
There are two types of options: calls and puts.
A Bitcoin call option allows option holders to buy Bitcoin at a specific price (strike price). If a trader purchases a call option and the price of Bitcoin rises above the strike price, the holder can exercise the option and buy Bitcoin at the strike price making a profit.
On the other hand, a Bitcoin put option allows option holders to sell Bitcoin at a specific price (strike price). If a trader purchases a put option and the price of Bitcoin falls below the strike price, the holder can exercise the option and sell Bitcoin at the strike price making a profit.
Open Interest Continues to Soar
Meanwhile, Bitcoin options open interest continues to soar prior to the expiry. According to data by Skew, the aggregate Bitcoin options open interest has crossed $1.7 billion.
Interestingly, Bitcoin options open interest on CME has surged in recent months, printing new highs on a regular basis.
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