This Friday, the BTC and ETH options markets will face a contract expiration of $22.9 billion, and the large open interest may trigger a volatility storm and directional choices in the market.

According to data from Deribit, the world's largest cryptocurrency options exchange, on Friday (September 27), there will be nearly $22.9 billion nominal value of BTC and ETH options contracts expiring, marking one of the largest expiration dates in the history of the crypto derivatives market, and it is expected to have a significant impact on short-term market volatility.

The structure of the open positions for the upcoming options contracts shows a clear polarization in the market. On one hand, a large number of BTC put options have a strike price set below $95,000 to hedge against the risk of a significant price drop; on the other hand, there is also a considerable amount of BTC call options betting on a price breakout above $140,000. This divergence indicates a serious disagreement in the market regarding future trends.

The short-term contract market is experiencing unusually active trading activity, indicating that investors are more inclined to adopt event-driven strategies such as short selling or forced liquidation for short-term trading, rather than investing based on long-term fundamentals. This trend may further exacerbate market volatility around the expiration date.

Due to a large number of options expiring simultaneously, market makers may engage in large-scale hedging operations to manage risk, which could trigger a Gamma squeeze effect. If the price approaches the maximum pain levels of BTC 95,000 and ETH 42,000 at expiration, market volatility may rise sharply.

Despite the increased short-term volatility risks in the futures market and the risk of derivative market fluctuations being transmitted to the spot trading area, analysts believe that this options expiration will help the market digest excessive bets and lay the foundation for a trending market in the fourth quarter.

Finally, it is recommended that investors closely monitor the changes in spot trading volume and funding rate structure before and after the options expiration date, in order to accurately grasp the real comparison of bullish and bearish forces in the market, thus making informed investment decisions.

#BTC # ETH #Expiration Options