Boxing Day bonanza: $27 billion in bitcoin, ether options set for year-end reset

BTC and ETH options worth billions will expire on Friday. (sergeitokmakov/Pixabay/Modified by CoinDesk) BTC and ETH options worth billions will expire on Friday. (sergeitokmakov/Pixabay/Modified by CoinDesk) What to know: The crypto market is preparing for the expiry of $27 billion of bitcoin and ether options on Deribit on Friday. The expiration involves over 50% of Deribit's total open interest, with a bullish bias indicated by call options outnumbering puts by almost 3-to-1. The market's panic has subsided, and the looming expiry is likely to be much orderly than last year, according to Deribit. The crypto market is bracing for a massive structural reset on Friday, with billions of dollars worth of bitcoin BTC$89,772.99 and ether ETH$3,041.32 options set to expire on Deribit. This colossal "Boxing Day" event, named for the holiday observed in many countries on Dec. 26, will see $23.6 billion in bitcoin options and $3.8 billion in ether options expire, that is they stop trading and are settled. These figures reflect the dollar values of active options contracts at press time, with each contract representing 1 BTC or 1 ETH. STORY CONTINUES BELOW Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters By signing up, you will receive emails about CoinDesk products and you agree to our terms of use and privacy policy. According to Deribit, the expiry, which affects more than 50% of the total open interest on the centralized exchange, is characterized by bullish positioning. "The max pain level sits near $96,000, while a put-call ratio of 0.38 reflects positioning skewed toward calls and a bullish bias," Sidrah Fariq, Deribit's global head of retail sales and business development, said in an interview on Telegram. The max pain price is the level where options buyers stand to lose the most money and options sellers, usually big institutions and market makers, make the most profit. Options are derivative contracts that give the purchaser the right, but not the obligation, to buy or sell the underlying asset at a predetermined price at a later date. A call option buyer is implicitly bullish on the market, while a put buyer is bearish, looking to hedge against or profit from a potential price drop in the underlying asset. The 'max pain' magnet "Max pain" is one of the most watched figures as options expiry nears. Because of the profit/loss implications for the two sides of the contract, some observers suggest that it creates a tug-of-war between professional traders adjusting their hedges, often moving the spot price toward the max pain level as the clock ticks down. In essence, supporters of the theory suggest it implies bitcoin could rise to $96,000 and ether to $3,100 by expiry. Still, the max pain hypothesis remains a contentious and debated concept within the broader crypto derivatives landscape, with many market participants suggesting it has little effect on prices. Bullish bias meets holiday lull As for the put-call ratio, it indicates that for every 100 call options in play, there are...

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