Over $6.51 billion in Bitcoin and Ethereum options are slated to expire on November 24, possibly signaling increased trading action. The looming expiration coincides with the recent U.S. DOJ charges against Binance, imposing a substantial $4.3 billion fine on the platform.
This event involves about 108,000 BTC options nearing expiration, displaying a Put Call Ratio of 0.83, leaning slightly towards call options, reflecting an inclination toward price increases. The ‘max pain point’ for these options sits at $33,000, indicating the price level where collective option holders could face significant financial loss. The total notional value of these BTC options stands at a remarkable $4.04 billion.
Simultaneously, around 1.2 million ETH options are nearing expiration, holding a Put Call Ratio of 0.71, showing a tilt toward call options. The max pain point for these ETH options stands at $1,700, with a notional value totaling $2.47 billion.
Understanding the concept of ‘max pain’ in options trading is vital. It refers to the price level at which the collective value of expiring options would cause maximum financial loss to option holders. Traders often use this to anticipate market movements as options near expiration.
The nearing expiration of these options implies that these contracts, providing the right (but not obligation) to buy or sell crypto at a predetermined price by a specified date, are reaching the end of their validity. On expiration, options must be exercised, or they become worthless. Depending on the market price in relation to the strike price, holders may choose to buy or sell the crypto assets.
The approaching expiration may lead to increased market activity and potentially unpredictable price swings. Given recent legal actions against Binance, which have stirred notable volatility, traders and investors closely monitor these developments.
