- The Bitcoin options market saw a colossal 88,000 Bitcoin option expiry Friday.
- Bitcoin options open interest plunged after reaching an all-time high.
Friday’s expiry was one of the largest in Bitcoin’s relatively short history. as over 88,000 Bitcoin worth of Bitcoin options expired, as reported by The Crypto Associate.
After reaching an all-time high, data by Skew shows that Bitcoin options open interest fell substantially following the expiry. This figure may be used to help quantify market interest in a particular asset and is calculated using the total outstanding bitcoin contracts at the end of the trading day.
Meanwhile, the Bitcoin options market is gearing up for another large expiry next month. Data by Skew currently shows that there are over 50,000 Bitcoin worth of Bitcoin options due to expire next month.
Buying Bitcoin options offer traders the choice to purchase or sell Bitcoin at a predetermined price on or before the options expiry date. When purchasing options, traders can choose between calls and puts.
Bitcoin calls allow option holders to purchase Bitcoin at a specific price, also known as the 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.
Bitcoin 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.
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.
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