On Feb. 24, at 09:00 UTC, bitcoin options with a total value of $1.8 billion will expire. This development has been a hot topic among cryptocurrency enthusiasts, traders, and analysts alike, as it may significantly impact the cryptocurrency market.
The Deribit market, the largest derivative market globally, has a notional value of $1.5 billion for this expiration. Currently, the max pain price in this market is 10% below the current bitcoin trading price.
The most significant pain point is the price level, where most options contracts would expire out of the money, causing essential financial pain for traders holding these contracts. In this case, the most significant pain point for bitcoin options is $22,000. This means that if bitcoin prices stay above $22,000, most options contracts will expire worthless, resulting in a significant loss for those who hold them.
Options are derivative contracts that give the holder the right to buy or sell an asset, such as bitcoin, at a predetermined price and time. The put/call ratio is a popular sentiment indicator in options trading. A put option gives the holder the right to sell an asset at a predetermined price, while a call option gives the holder the right to buy an asset at a predetermined price.
The put/call ratio is the ratio of the total number of put options to call options. A ratio above 1 indicates more bearish (put) options than bullish (call) options, while a ratio below 1 indicates the opposite.
Today, the put/call ratio for bitcoin options stands at 0.76, meaning there are more bullish options than bearish options. However, this ratio has been changing throughout the month, and it’s hard to predict how it will affect the market.
The number of bitcoin option positions has reached 309,000, the second-highest in history, only surpassed by the number on Nov. 11 of last year. This shows to potentially earn a profit of $480 million, and bitcoin bulls need to drive the price above $24,500 by the end of the day.
Conversely, for the bears to reduce their losses, they need the price to drop by 3.5% below $23,000, which would be their optimal scenario.
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