The leading digital currency rose 1 percent early Friday morning, while Ethereum (ETH) jumped 1.6%.
Bitcoin (BTC) is now currently worth $26,509, down 11 percent in the previous 30 days. Over that same period, the second- largest digital currency by market capitalization has decreased 4.6%.
Today, Bitcoin (BTC) options on Deribit expired this morning with a notional value of $2.26 Billion and $1.25 Billion for Ethereum (ETH), inducing uncertainty in the market.
Notional value refers to the total number of outstanding option orders in the market that have is still to expire.
The Bitcoin (BTC) options market had a put-to-call ratio of 0.44. Similarly, for Ethereum (ETH), every put option had two call open options opened. This implies that traders mostly held positive tendency positions, which is likely why the price responded negatively before the expiry.
An option call contract is a financial derivative that gives the holder the right, but not the obligation, to buy a specific asset—in this case, Bitcoin—at a predetermined price. A put option gives the holder the right to sell.
And once an investor purchases a call option, they are essentially betting that the price of the underlying investment will boost over the strike price before the option expires. The strike price represents the pre-determined price at which the option is bought.
For example, a May call option for a strike price of $27,000 would mean that for the buyer to turn a profit, the price must be higher than $27,000 at its expiration.
Usually, the market has a tendency to fluctuate toward maximum pain point next to option expiration. The max pain point for today’s expiration event was $27,000 for Bitcoin (BTC) and $1,800 for Ethereum (ETH), approximately current prices.