What is Bitcoin Option Contracts? $1 Billion in BTC Options Expire Friday
[vc_row][vc_column][vc_column_text]Most Bitcoin options contracts set to be expired are between $ 11,000 and $ 12,000 above the current BTC price.
Many Bitcoin and Ethereum options contracts expire on Friday. It could create instability, say some experts. Equally, nothing is impossible. In option contracts, sellers are not required to purchase goods at the end of the contract.
Nearly a million-dollar BTC options contracts, less than half available, are set to expire on Friday, with data from Skew analytics. And Ethereum is not far behind. About $ 450 million contracts for ETH options expire on the same day.
This could bring all the crypto into the market as traders look to dump or HODL. Here’s what to expect.
What is an options contract?
What are we talking about? An options contract allows people to buy Bitcoin in the future at a pre-agreed price. So, if you had entered into an option agreement where Bitcoin cost about $ 4,000 following a mid-March crash to get your Bitcoin at that price coming on the last Friday of September, that would be a wise decision as Bitcoin doubles in price.
This is also the basis for the future contract of Bitcoin. But where the difference is that a future Bitcoin contract creates a contractual obligation to buy that BTC at the expiration of the contract. Optionally, traders are not legally bound to buy Bitcoin but have the option to do so.
Back to business
BTC options contracts are big business. At Derebit, the largest platform for volume selection contracts, retailers exchange about $ 55 million per day. And as of yesterday, there are about $ 2 billion in BTC options contracts that are about to expire. That means almost half will expire on Friday. Ethereum also follows the same trend.
What will happen now? According to a research report from Coin Metrics, ETH, “the event is likely to add to the price volatility throughout the week, as traders seek to open up these positions, make them, or perhaps take market action in anticipation”.
With BTC, the same, Charles Bovaird, a researcher at the crypto research firm Quantum Economics, says. “As these contracts are nearing expiration, tensions could rise as investors choose to buy, sell or allow their contracts to expire.” With the volatility in prices this coming week one could think of investment in crypto currencies. Bitdenex will provide you an access to trade in different coins without any obligations. So if you have not created an account yet, register now.
[/vc_column_text][mnky_button button_style=”mnky-round-button” title=”Sign Up Now!” color=”#ffffff” bg_hover_color=”flat-mint” center_element=”button-center-align” link=”url:https%3A%2F%2Fexchange.bitdenex.com%2Fsignup|||”][/vc_column][/vc_row]