Bitcoin US$16 billion quarterly options close to maturity, outstanding contracts clearly bearish

An option can be thought of as a $100 reservation right: you could buy an laptop for $1,000 at any time over the next four weeks. If the market price rises to $1200, your exercise is equivalent to a net gain of $200 (with $100 deductible); if it doesn't exceed $1000, you may waive that right and lose only that $100.

Traders often use a bear option to bet that the price of an asset, such as BTC or ETH , is going up. A bear option, on the other hand, offers buyers protection against falling prices.

Since 2020, the crypto options market has expanded exponentially in size. Traders combine bearish and bullish options with spot, futures positions to express judgments about price direction, volatility, and time value. This growth also makes quarterly option expiration settlement a key event for traders to closely watch.

One indicator that traders are generally concerned about is the "maximum pain point" of an expiring contract: the spot price at which a buyer would lose the most overall on the day it expires. There is a theory that sellers will try to push the spot prices towards their maximum pain points, leaving buyers with the largest losses - although this has been disputed and questioned.

Bitcoin 's current maximum pain point is $75,000, significantly below the current spot price of about $85,500. Deribit describes this as a "soft magnet for pre-maturity pricing" that has caused most collective losses to buyers.