A Bitcoin option

[Stanlosky]

A Bitcoin options contract is a derivative contract that allows investors to speculate on Bitcoin price movements without owning Bitcoin itself.

There are two types: call and put options. Call options give investors the right to buy a cryptocurrency at a specific price before a certain date. Put options, on the other hand, allow investors to sell a cryptocurrency at a particular price before the expiry date.

On May 3, a total of 23,367 Bitcoin contracts worth $1.39 billion are set to expire. Data from the Deribit exchange reveal that the put-to-call ratio for Bitcoin options contracts is currently at 0.5, with a maximum pain point of $61,000. The maximum pain point refers to the price at which the asset will cause financial losses to the greatest number of holders.

Similarly, a total of 334,248 Ether contracts with a notional value of $1 billion are expected to expire on Friday as well. These expiring contracts have a put-to-call ratio of 0.37 and a maximum pain point of $3,000.

The expiry of options contracts has historically been followed by short-term price volatility in the spot crypto market. Bitcoin and Ether have experienced bearish pressure in the past couple of weeks.