Almost of a billion of dollars worth of bitcoin option contracts, a little under half of existence , are set to be expire today, per data from the Skew analytics, and the Ethereum isnt far behind worth about of ETH $450 million will be expire on the same day.
This is could potentially introduce for a whole lot of crypto back into the market as the traders look to dump or else.
Move on to the question of what is an option cotract? First thing first what are they talking about?
An option contract when we say lets people buy Bitcoin in the future at the price to agreed beforehand. So?if you entered into an option contract when bitcoin worth into $4,000 just follow in mid march crash to recieve ur btcoin at that very price worth come from this final friday of september that would have been a smart dicission for all or lucky bet, Bitcoin has more than double in the price they wll give.
This also the premise of a Bitcoin Future contract, but where the two differ that a bitcoin future contract is creating a contractual obligation to make sure that we can buy that bitcoin upon or without the contracts expiry. With have options, traders are not contractually to obliged to buy up the bitcoin but we have simply have the options to do so. As much as we can buy something.
Back to the Bussines of what Bitcoin option contract are a big bussines. On Deribit, is the largest platform for options contract by volume, traders exchange about worth of $57 worth of options contract each day. And as today there are about $2 billion worth of Bitcoin options Contract yet it expired. That means that about of half will expire todays , Its just a similar picture for Ethereum.
So? What will happend next?According to the research from the Coin metrics,this event will likely add an additional volatility the price action throughout the week. As traders look to hedge exposure of these positions, work of them, or possibly take an action in the spot market in anticipation.
For the Bitcoin much has the same Charles said the VP content of crypto, researcher firm Quantumm economics,as these contracts approach their expiration date? Votatility could spike as an investor opt to buy and sell or let their contract will expire.
Trading platform Hxro is a good chunk of the options contracts are between far above of $11,000 and $12,000 bitcoins for current price of $10,310.
That the market is effectively giving you 20:1 odds ringht now that the price will be trade at or above $11,000 by today hitting to $11,000 would be no great explosion, Bitcoins the price was just above $11,000 today. But any higher than a usual.
Then? if the large of their contract holders use this ability to purchase botcoin before the contract expired. That would place upward pressure on the cryptocurrencys price. Likewise if contract holder use their options to sell it would place downward pressure on the bitcoin prices.
However, it could also have a very little impact at all and if the options expire without being exercised to use then they wont place upward or downward the price pressure of bitcoin.
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