Record $6.1 Billion Bitcoin Options Expiry Set For March 26

Image Source: Reuters.com

Los Angeles (CoinChapter) – Since the start of the new year, the open interest in Bitcoin options has soared to new highs. In conjunction with the BTC price setting a new record. The two combined have resulted in a potentially historic $6.1 billion expiry set for March 26.

The largest expiry on record was $3.5 billion worth of Bitcoin options contracts on Jan. 29, 2020. This figure represented 36% of all open interest at that time.

By comparison, Bitcoin’s options on March 26 expiry hold 100,400 BTC. That equates to 45% of its contracts set to expire in less than two weeks from now.

Options are divided into two segments: call (buy) and put (sell). Call options allow the buyer to acquire BTC at a fixed price on the expiry date. Meanwhile, put Bitcoin options are commonly used as hedge or protection from negative price swings.

Bitcoin Options markets are all-or-nothing. Meaning they either have value or become worthless if trading above the call strike price. The opposite holds true for put option holders.

It’s easy to project the potential impact of March 26’s expiry. When omitting the neutral-to-bearish put options below $47,000 and the call options above $66,000.

There isn’t much incentive to pump or dump the price by more than 17% because potential gains very rarely will surpass the cost.

That leaves roughly $1.13 billion worth of call options from $32,000 to $64,000 strikes. For the aggregate options expiry on March 26.

The more bearish put options down to $47,000 amount to $462 million. As a result, there’s a $668 million disproportion favoring the more bullish call options.

Bitcoin Options Expiry Should Fall Short Of $6.1 Billion

Nearly 43% of the $6.1 billion options expiry have already been deemed irrelevant. However, the bulls will remain in control of the remaining open interest. Because the recent Bitcoin price hike to $61,000 wiped out 84% of the bearish options.

An increasing amount of put options will lose their value if Bitcoin remains above $52,000. Increasing the advantage from the neutral-to-bullish call options.