Bitcoin options worth $ 930 million will expire next Friday.

[Lucius]

I've been seeing this news for at least 2 weeks on various pages, and I see quite different interpretations of what it means. Of course, the news for many is interesting because of the figure of $930 million, and the fact that this is represented 70% of all open positions. But if detailed explanations are read then it is clear even to someone who is not an expert that it is not something that should have a significant impact on the market. The question is will this be used to manipulate the market in 2 days when the options expire or nothing will happen?

To date, more than 100,000 Bitcoin options with a total value of $ 930 million expire on June 26, and that number represents almost 70% of their total open positions.  Skew data shows that open interest reached $ 1.3 billion, a 100% increase in the past two months. The expiry of the current CME contract on June 26 consists almost entirely of call options, hence the bullish positions. 75% of these open positions are now in the unlikely scenario of $ 11,000 and higher. This leaves USD 67 million in call options that may have a potential impact on the market. This is unlikely to have a significant impact compared to an average daily volume of $ 300 million traded on CME futures. In addition, investors should note that each CME contract entitles 5 BTC.

[jackg]

I don't think expiring options really does much. But 26th sounds familiar, I'm sure bitmex is around that time too (but I think theirs expire in September or August)...? If most exchanges expire on the same date then this could cause issues imo.

I saw a thread here yesterday with someone reporting low overall volume and both of these coinsiding could be an interesting event to see...

CME really shouldn't just dump much of this on the bitcoin market and I'm assuming their futures follow an average price of bitcoin too... They'll probably just be getting adsorbed into new contracts opened from now.

[STT]

This could explain why we go sideways, its possible for a price to be pinned to the most profitable area for options to expire I believe that can occur.   The tail can wag the dog but it sounds like thats not going to be the case here if they were really so incorrect to be expecting 11k.

75% of these open positions are now in the unlikely scenario of $ 11,000 and higher.

This was because of halvening maybe, I dont get why so many would bet that scenario.  I do agree 10k isnt normally as sticky as its been recently and maybe it was initially very cheap to bet 11k, you have to be really clever to juggle option strategies and be smart on ratios imo.   If it had been 1bn of bets for 10k to arrive then I would not doubt we get disruption on the day of expiry just because it pays for them to bid or sell down to achieve that price expiry.    Definetly seems like useful info to me, makes me wonder if we would go higher at all from this or many attempts to move that way but I dont know how probable that is.   Maybe someone can calculate the odds.

[Lucius]

I don't think expiring options really does much. But 26th sounds familiar, I'm sure bitmex is around that time too (but I think theirs expire in September or August)...? If most exchanges expire on the same date then this could cause issues imo.

There is no Bitmex in this story, and if you click on link in total $1.3 billion in options is distributed between Deribit, LedgerX, OKEx, CME and Bakkt. Let someone correct me if I'm wrong, but Bitmex doesn't offer this option at all?

This could explain why we go sideways, its possible for a price to be pinned to the most profitable area for options to expire I believe that can occur.   The tail can wag the dog but it sounds like thats not going to be the case here if they were really so incorrect to be expecting 11k.

As far as I remember, in the past such dates have resulted in a drop in price, but still volatility is present constantly so any good or bad news can be linked to the current market situation. How much this will be the case tomorrow remains to be seen, but I think the effect will still be only short-lived.

[exstasie]

This quote seems noteworthy:

This leaves USD 67 million in call options that may have a potential impact on the market. This is unlikely to have a significant impact compared to an average daily volume of $ 300 million traded on CME futures.

They'll probably just be getting adsorbed into new contracts opened from now.

Probably. CME Bitcoin options contracts deliver futures contracts, and I believe most futures contracts are rolled forward.

The next futures contract settles next Monday, the 29th. I believe CME futures settlement has triggered significant moves in the past. It's probably more relevant than June options expiration.

[buwaytress]

I have read about the futures gap, you have them on Friday too, and then price rushes in to fill the gap on Monday, actually did turn out the way predicted when I last looked so makes some sense, though it all normalises anyway after. Don't know if the same will happen for options.

[exstasie]

I have read about the futures gap, you have them on Friday too, and then price rushes in to fill the gap on Monday, actually did turn out the way predicted when I last looked so makes some sense, though it all normalises anyway after. Don't know if the same will happen for options.

There are gaps in options markets for the same reason. This is a different situation entirely though. Gaps (as you point out) happen because of market closes. This is where the contract expires (worthless for some, and in the money for others) and then settles by delivering BTC futures contracts.

There was some speculation that this delivery would affect the market but realistically the volume was too small to matter that much. The contract expired yesterday and the spot market went sideways for the next 20 hours.

[okala]

I see the volatility and volume keeps going down and the probability that this option expires will affect bitcoin negatively is there. I see people need need more money now then holding bitcoin.

[buwaytress]

There are gaps in options markets for the same reason. This is a different situation entirely though. Gaps (as you point out) happen because of market closes. This is where the contract expires (worthless for some, and in the money for others) and then settles by delivering BTC futures contracts.

There was some speculation that this delivery would affect the market but realistically the volume was too small to matter that much. The contract expired yesterday and the spot market went sideways for the next 20 hours.

Yeah, I do see the logical sense in those gaps of markets reopening and rushing in to meet the last known price, again, temporarily before equilibrium is met. Reading a bit more on this options thing and it seems it's Deribit who's got the largest market share of options and their own CEO doesn't think the impact will be significant now or in the future.

Hard to predict irrational sentiment though right?