$1 billion in Bitcoin options open interest is set to expire on February 5. This expiry is different in that while it is balanced at the current Bitcoin levels. Data also shows that bulls have a number of incentives to push its price above $40,000.
By analyzing the aggregate open interest between $28,000 and $43,000, there are $300 million worth of neutral-to-bullish call options stacked against $290 million open interest from put options. Therefore, by analyzing strikes 25% above or below the current BTC price, there’s virtually equilibrium from both sides.
Neutral-to-bearish put options are concentrated at $34,000 and below. Between $34,000 and $36,000 strikes, there’s a perfect balance, as both call and put options are equally matched.
The bears incentive to push the price down presents an imbalance of 3,400 BTC contracts despite the discrepancy below $32,000. That would represent a $109 million open interest for a 13% or more negative price move. While this is a significant number, it is unlikely to create the incentives necessary to take the bulls by surprise.
Bulls To Push Bitcoin Price To $40,000
If bulls want to push the price up to $40,000 it would result in a 2,800 BTC contracts imbalance. This is equivalent to a $106 million open interest for a 4% positive price swing. Thus is a better risk-reward for such an effort.
The 30% to 20% delta skew is the most useful indicator in assessing whether market makers and arbitrage desks are pricing the risk for upside or downside. It measures the premium difference between the neutral-to-bullish calls options stacked against similar put options.
A number between 0 and 15 is considered neutral. A negative delta skew indicates that large option traders request an extra premium to take downside risks, hence being regarded as bearish.
Over the past few days the indicator has remained at 10, showing a perfect balance between risks, meaning there are no incentives for market makers and arbitrage desks to pressure BTC in either way.