On October 30 at 11:00 MSK, monthly options on Bitcoin and Ethereum expire on Deribit. The BTC volume is $10.86 billion, and the ETH volume is $783 million.
An option is a contract for the right to buy or sell an asset at a predetermined price. Such contracts expire all at once once a month. Deribit is the world's largest platform for BTC and ETH options.
For a trader, this is a risk window. After BTC fell below $80,000, downside protection costs noticeably more than a bet on growth.
Where are the positions?
The bulk of open interest is in calls with strikes of $90,000-$100,000. Calls are bets on growth. Open interest is the sum of all open contracts.
At a price of around $80,053, these contracts are already out of the money, meaning they will expire at a loss.
- $79,300 - BTC fell to this level earlier in the week
- 1.4% - BTC's losses on Thursday
- One contract on Deribit equals one BTC or one ETH
Why is the market paying for a decline?
Jean-David Péquignot, Chief Commercial Officer of Deribit: the break below $80,000 shifted the short-term 25-delta skew strongly in favor of puts. Options on a decline cost roughly 10 volatility points more than calls.
Simply put, downside protection costs more than a bet on growth.
Volatility is priced above actual. The 30-day DVOL expected volatility index is 36 versus actual 31. The market is pricing in larger moves than those seen in recent weeks.
What does this mean for a trader?
There are two scenarios for the expiration window.
- Scenario A. Closing and rolling over large positions produces sharp moves and widening spreads around 11:00 MSK. It affects both ETH and SOL - around $100, a test of the $98 support.
- Scenario B. The main strikes are already out of the money, and expiration passes technically. Overpriced volatility deflates after settlement.
What else is there this week?
In the background are rate decisions from the Fed, the ECB and the Bank of Japan, as well as Coinbase's earnings report.
- 1.1% - how much Nasdaq-100 futures lost on Thursday after Alphabet's weak report
- Meeting dates are conveniently checked in the economic calendar
- The terms for news trading are best checked in advance in the prop firm catalog
Planning to trade the Friday window?
A $10.86 billion expiration is a couple of hours when spreads blow out. A stop triggers on a wick that is barely visible on your chart. What matters is not the forecast but the fine print of the program: at some prop firms, trading during such high-volatility windows is standard, while at others, holding a position at the moment of settlement is a direct violation resulting in account disconnection. A separate line is how the daily loss limit is calculated: by closed trades or by the worst point within the day. It is worth checking this today, before the window opens.