(BTC) derivatives continue to grow despite light spot trading over the past two months. The cryptocurrency’s options market is on its way to a record $1 billion monthly expiry this Friday.
At press time, there are 114,700 option contracts (notional value of over $1 billion) set to expire on June 26 across major exchanges – Deribit, CME, Bakkt, OKEx, LedgerX – according to data provided by the crypto derivatives research firm .
Options are derivative contracts that give buyers the right but not obligation to buy or sell the underlying asset at a predetermined price on or before a specific date. A call option gives the right to buy and the put option represents the right to sell. With options, traders can make bullish or bearish bets on contracts at various price levels called strikes that expire in different months.
“This is definitely the largest BTC option expiry by a country mile,” said Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5.
Meanwhile, Skew CEO Emmanuel Goh said that “with big quarterly expiry, you tend to see some pinning and then the market moving post-expiry.”
Option expiries can influence market direction via a process known as “pinning” in which option traders try to move the spot price to avoid sharp losses.