Almost $2.5 billion in Bitcoin and Ethereum options expire today, which could lead to a potentially volatile end of the month as traders balance upside bets with significant downside risk.
On the surface, the positioning seems constructive. But beneath the call-heavy distribution lies a remarkable anomaly: one of the largest clusters of open interest in Bitcoin is far below the spot price — at the $40,000 strike.
Calls dominate, but Max Pain is higher
Bitcoin is currently trading around $67,271, with max pain placed at $70,000. Open interest shows 19,412 call contracts and 11,044 put contracts. This results in a put-to-call ratio of 0.57 and reflects a generally bullish sentiment. The total nominal volume related to the expiration is approximately $2.05 billion.
Ethereum mirrors this constructive trend but in a more balanced manner. ETH trades near $1948, with max pain at $2025.
Calls (124109 contracts) outnumber puts (90017), resulting in a put-to-call ratio of 0.73 and a nominal value of approximately $417 million.
"...positioning leans towards calls for both assets, with BTC showing the strongest upside distribution. Max pain levels are below dominant call open interest in BTC, while ETH positioning is more balanced but still constructive," note analysts at Deribit.
Max pain refers to the price at which the most options expire worthless, thereby minimizing payouts to buyers.
With both BTC and ETH trading below their respective max pain levels, price movement towards these levels at expiration could reduce losses for option sellers.
$40,000 put: A tail-risk signal
Despite the overall bullish trend, a massive concentration of puts at the $40,000 strike has caught the market's attention.
The put option at $40,000 for Bitcoin is now the second largest strike based on open interest and represents approximately $490 million in nominal value. This comes after Bitcoin's sharp correction from previous highs, which has altered the need for hedging in the market.
"Although overall positioning towards expiration is call-heavy, there is one strike that stands out: the $40K BTC put remains among the largest open interest strikes before the February expiration. Demand for deep OTM downside risk is still evident, even as headline put/call ratios point in a constructive direction," indicate Deribit analysts, highlighting the unusual size of the position.
In short, traders may be positioned for upside, but they will not rule out a new volatility shock.
Hedging, premium, and structural implications
This dynamic suggests a broader shift in Bitcoin's derivatives market. Options are increasingly being used for directional bets, yield strategies, and managing volatility.
Analyst Jeff Liang suggested that extracting premium from the options market could reduce structural selling pressure.
"If we can steadily extract premium from the options market and strengthen Bitcoin HODLers, it means: HODLers no longer need to sell their Bitcoin to have a better life... Selling pressure on Bitcoin will decrease... This will further lift the Bitcoin price," he stated.
The analyst described option premium as a "localized pump" driven by fear and greed, redistributing value to long-term investors without contradicting Bitcoin's limited supply.
Overall, calls dominate over puts for both BTC and ETH, signaling that traders are maintaining exposure to upside. However, the large amount of deep OTM hedges reveals a market that remains cautious.
With billions in nominal value set to expire, the biggest question is whether prices move towards max pain—or if the hidden demand for crash protection proves to be well-founded and revives volatility just when traders expect calm.