In the past 24-hours, the Bitcoin price dropped by 10% to$30,000. This price drop occurred just two days after this month’s futures and options expiry. Despite its high-records of $4 billion options expiry being two days away, both bull and bear traded at similar sizes today.
The expiry options are divided into two segments. With the call (buy) options, the buyer can acquire BTC at a fixed price on the date of expiry. Whereas, the seller can make the BTC sale. Basically, they are used on either neutral arbitrage trades or bullish strategies.
The other segment is the put (sell) options used as a hedge, protection from negative price swings. To clearly understand the balance of these competing forces, one should compare the calls and put the option size at each expiry price (strike). Options markets are either none-or-all. It means they either have value or it becomes worthless if trading above the call strike price, or the opposite for put option holders.
The trading volumes since 24 hours have bought up more bullish options to 51%. This number increased because of the ultra bullish strikes at $37,000 and higher. Thinking there are less than 36 hours for the expiry, the contracts are trading below $50 each.
Excluding these over-optimistic strikes, today’s trading added another $95 million worth of call options open interest below $35,000. Whereas, the more bearish put options at $27,000 and higher amount to $90 million worth of open interest.
Today’s activity results have been neutral for Friday’s options expiry. Also, one should check the overall open interest imbalance separate from today’s movement.
By excluding the put options below $27,000 and the call options above $35,000, you can figure out the impact of Friday’s expiry. Rewards to pump or dump the price by more than 16% will be rare, as the potential gains will seldom surpass the cost.
This data leaves $582 million worth of call options up to $35,000 for the options expiry on Jan 29. However, the bearish put options down to $27,000 amount to $422 million. Hence, there is a $160 million imbalance favoring the bullish call options.
Considering the volumes traded in the past 24 hours and the put options open interest, there is hardly any gain for bears in pressuring BTC below $29,000 from the options market point of view.