We may see some volatility next week in BTC...
There is a large number of CME Bitcoin Options Contracts expiring next week, and the vast majority are currently out of the money.
Specifically...
There are about 30k worth of BTC set to expire next week.
Of that 30k worth, 97% of those are calls and 98% of those calls are currently out of the money...
Check it out:
(Source:
)https://twitter.com/ecoinometrics/status/1273963746805891073
- ecoinometrics
Cool, so what does that mean?
It means that the vast majority of positions are currently expected to expire worthless.
Which means that people are going to lose a lot of money if BTC stays around the current levels.
Conventional wisdom might suspect that those involved in those positions may try and move the price up in order to not have their options positions expire worthless.
However, the max pain theory of option investing says the exact opposite...
It states that there is a tendency for the price of an underlying asset to gravitate towards its "maximum pain strike price", which is the price where the greatest dollar value of those options will expire worthless.
Which is more or less what we are seeing happen right now.
There is a vested interest in not seeing bitcoin close above $10k by the end of next week.
For that reason, the odds seem stacked against bitcoin seeing an immediate break of that $10k resistance level.
Most of these options positions were likely taken around the halving as a protection just in case bitcoin took off due to all the excitement.
It didn't happen and now all those options purchases are likely to expire worthless.
Stay informed my friends.
-Doc