Crypto Braces for $8.2B Bitcoin and Ethereum Options Expiry; Ether options open interest concentrates at $5,000 calls for end-of-June expiry

May 31, 2024

Observations & Insight

Josef Schroeter Reflects on the CQG’s Transformation and the Evolution of Electronic Trading in Derivatives Markets

Part Two of The Path to Electronic Trading Interview with Former CQG President
Elmhurst, IL (JLN) – Josef Schroeter, the former president of CQG, shares his insights on the company’s journey and the evolution of electronic trading in the derivatives markets.

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European Principal Traders Gain Strategic Edge with New Advisors and Leadership, Aims to Enhance Market Transparency and Competitiveness

Boca Raton, FL (JLN) – The FIA European Principal Traders Association has more punching power now, said its secretary general, Piebe Teeboom, after the traders group added two advisors to its team. Teeboom was interviewed by John Lothian news at the FIA International Futures Conference in Boca Raton, FL in March for the JLN Industry Leader video series sponsored by Wedbush.

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Lead Stories

Crypto Braces for $8.2B Bitcoin and Ethereum Options Expiry; A massive $8.2 Billion in Bitcoin and Ether options contracts expire today, potentially triggering price swings in the market.
Kyle Calvert – Daily Coin
Today marks a potentially volatile day for the cryptocurrency market as a massive $8.2 billion in options contracts for Bitcoin (BTC) and Ether (ETH) expire. This expiry has historically been linked to price swings, and analysts are closely watching how it will impact the current market sentiment. Max Pain Looms for Leverage Traders The options contracts expiring today represent 69,000 Bitcoin options valued at $4.7 billion and 920,000 Ether options valued at $3.5 billion. Data from Deribit, a major crypto derivatives exchange, reveals a put/call ratio of 0.61 for Bitcoin options. This indicates that more call options (bullish bets) are expiring compared to put options (bearish bets).

Ether options open interest concentrates at $5,000 calls for end-of-June expiry
Brian McGleenon – The Block
Analysts said open interest in ether options is concentrated at $5,000 calls expiring at the end of June. They added that this indicates a bullish outlook, with traders using call spreads between $4,000 and $5,000 to position for potential price rises. The largest cluster of open interest for ether options is currently $5,000 calls for the end-of-June expiry indicating a bullish outlook with traders using call spreads between $4,000 and $5,000 to position for potential price rises, analysts said. “When we examine derivatives data, we notice that the highest open interest for ether is currently in the June $5,000-call option,” SynFutures co-founder Rachel Lin told The Block. This observation is supported by data from the Deribit derivatives exchange, which show the largest concentration of ether options open interest is calls at a strike price of $5,000.

How Will Crypto Markets React to Massive $4.7B Bitcoin Options Expiry Today?
Martin Young – Cryptopotato
Friday is crypto options expiry day but today is an end-of-month event with a massive batch of expiring Bitcoin contracts, how will markets react? Crypto markets have declined slightly this week as sentiment wanes in the wake of last week’s US Securities and Exchange Commission’s approval of spot Ethereum exchange-traded funds. Nevertheless, volatility could increase when a whopping $4.7 billion in notional value Bitcoin options contracts expire on May 31. The 69,200 contract expiry is huge compared to last week’s event, as month-end derivatives activities usually are, according to Deribit.

Why Bitcoin (BTC) Price Is Falling Suddenly? The price of Bitcoin is nosediving as the market is trying to process the impact of the Options expiry and the DMM Exchange hack
Godfrey Benjamin – CoinGape
The price of Bitcoin has dropped in derailment of its proposed monthly close.
Despite the earlier attempt to end the month on a bullish note, Bitcoin (BTC) price is fast giving away its accrued gains amid a heated market. At the time of writing, Bitcoin is trading at a 1.64% drop in 24 hours to $67,328.02. This comes on the back of the 0.99% slip in the combined crypto market cap.

Nvidia earnings could spark $200 billion swing in shares, options show
Saqib Iqbal Ahmed – Reuters
Traders are pricing in a big move for Nvidia’s shares after the chipmaker reports earnings on Wednesday, though expectations for volatility are more muted than in the past, U.S. options markets show. Nvidia’s options are primed for an 8.7% swing in either direction by Friday, according to data from options analytics firm Trade Alert. That would translate to a market cap swing of $200 billion – larger than the market capitalization for about 90% of S&P 500 companies.

How Rage, Boredom and WallStreetBets Created a New Generation of Young American Traders; An excerpt from Nathaniel Popper’s forthcoming The Trolls of Wall Street.
Nathaniel Popper – Bloomberg
By the end of 2011, Jaime Rogozinski, 29, had fallen into a rut. He spent his days in front of a computer screen in a windowless office at the Inter-American Development Bank in Washington, DC, where he had an unexciting job helping to maintain the endless databases of economic statistics that the executives used. After work, he took the train home to his bland condo in the suburbs that he hadn’t bothered to decorate. When he came in at night, he generally made a beeline for his bedroom, where he spent more hours in front of a different computer screen, scrolling through the dribs and drabs of other people’s lives on social media.

Wall Street tests market fallout of a Trump-Biden rematch; VIX Index futures indicate traders are bracing for stock market volatility around the November election.
Esha Dey, Carter Johnson and Jordan Fabian – Bloomberg
This much is clear for the financial markets: The US presidential election is likely to usher in a bumpy end to 2024. Futures on the VIX Index – known as the fear gauge – show traders are already preparing for the risk of stock-market swings around the November vote. Analysts say the US dollar may rise at least temporarily as investors shift into havens. And bond traders are mindful of a potential repeat of 2016, when Donald Trump’s victory triggered a selloff on worries that tax cuts would push interest rates higher by pouring fuel on an already growing economy. But beyond that, the longer-term implications for stocks, bonds and currencies are difficult to predict, complicating efforts to provide a clear-cut playbook for how to best position for one outcome or the other.


Stock Market trading hours unchanged as SEBI rejects extension bid: NSE CEO
Securities and Exchange Board of India (SEBI) has rejected the proposal to extend the trading hours of the stock market, said Ashishkumar Chauhan, the chief executive of National Stock Exchange (NSE) during a post-earnings call on Monday. “Currently there is no plan to increase the timings (for trading) as SEBI has returned back the application which we had provided because the stock brokers seemed to have not given the feedback that SEBI wanted,” Chauhan said.

Large derivatives positions show traders expecting stability, no major swings post election results
Sucheta Anchaliya – MSN
Benchmark indices Sensex and Nifty fell on May 30, the day of the NSE index’s monthly derivatives expiry. Nifty dropped 216 points or 0.95 percent, settling at 22,488.65. With just a few days left before the election results, options and futures data reveal that the largest positions in the Nifty June series are short straddles at 23,000, currently offering a credit of approximately Rs 1,150.

Regulation & Enforcement

CME Group fines, suspends trader for violating wash trades prohibition
Maria Nikolova – fx news
International derivatives marketplace CME Group has posted a notice of disciplinary action against Jeong Taewon. The Chief Regulatory Officer of CME Group’s Market Regulation Department issued a charge against Jeong Taewon for violating Rule 534. based on allegations that, from July 19, 2022, through September 27, 2022, Jeong knowingly placed buy and sell orders in the same product and expiration month, where he knew or reasonably should have known that the purpose of the orders was to avoid taking a bona fide market position exposed to market risk in the September 2022 E-mini S&P Options market.


Equity vol convexity selling gains momentum; Risky hedging strategy is attracting interest but can investors learn from past convexity blow-ups?
Faye Kilburn –
“You’re playing with fire when you’re selling this thing.”  This is how one analyst describes the spiralling risk associated with selling equity volatility convexity. Yet investors are dabbling in the strategy once again, as returns from other, lower order premia such as volatility, skew and term structure have dried up. Equity vol convexity selling typically harvested through options on the Vix volatility index or structured products such as variance swaps involves providing hedges against

Option strategy of the day
Trading View
Indian benchmark index Nifty is trading positive to range bound at the start of the June series. Around noon Nifty was trading at 22,522 up 35 points or 0.15 percent. “Nifty has been trading within an upward sloping parallel channel and now it has just reversed from the upper end of the channel, ” said Jay Thakkar – Head Derivatives and Quant Research at ICICI Securities. Thakkar believes that the Index is likely to remain in this range as the IVs which have gone up quite a lot due to General Election event are likely to crash post the event.


The Option Block 1288: The Wrong Side of History
Option Block
We’re back with another episode of The Option Block brought to you by Cboe Global Markets. On this episode, we break down the latest in the options markets today including CRM and silver. We also look at the most active equity options today including FFIE, HOOD, and CRM. We discuss earnings today in FL, BURL, BBY, and DG. We also look at unusual options activity in FL, MRVL, and AVTR, and much more.

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