The Big $1 Billion Expiry

On February 5th, a cool $1 billion in Bitcoin (BTC) options is set to expire like that pizza you meant to eat but left in the fridge just a bit too long. While this amount seems modest compared to the juggernaut of $4 billion expiring last month, it still holds significance in the crypto ecosystem, especially for monthly and quarterly expirations that tend to carry the most weight.

A Balanced Table

What makes this expiry peculiar is the overall balance at current Bitcoin levels. Data suggests some bullish incentives exist to nudge the price above $38,000. Per the analytics from various exchanges, particularly Deribit—boasting an impressive 84% market share—there’s a neat setup brewing:

• $300 million in neutral-to-bullish call options.
• $290 million in put options lurking at lower levels.

At these rates, we’re practically sitting at equilibrium. Can you feel the market tension? It’s like a game of tug-of-war between bulls and bears, just with a lot more zeros.

Why $34,000 is the New Battleground

Interestingly, while bears are getting their claws out with put options stacked at $34,000 and below, there’s an heavenly equilibrium zone between $34,000 and $36,000—with calls and puts evenly matched. But beware! Below $32,000, there’s a a mere $109 million open interest dangling—almost like bait for the bears to take a swing.

But hey, if bulls can muster the strength to push that price back to $38,000, they would create a measurable $106 million risk-reward scenario. So, grab your popcorn folks—this is shaping up to be one thrilling ride!

Delta Skew: The Calm Before the Storm?

As we brace for the upcoming expiry, let’s understand how market makers are pricing the risk involved. The 30% to 20% delta skew is the tool of choice here. This nifty indicator measures how option traders are pricing in the risks of upside versus downside.

The skew has been hanging at 10 lately, which indicates a perfect balance—not much excitement in either direction for BTC prices as the expiry hits. So don’t be surprised if the market plays it cool, like that casual friend who just goes with the flow.

The Clock is Ticking

Mark your calendars! OKEx, Bit.com, and Deribit will have their contracts mature at 8:00 AM (UTC) on February 5th. But remember, folks: the opinions expressed are just that—opinions. Every investment carries risks and you might not want to roll your entire life savings based on a hunch!