Sign InSign Up

Bitcoin’s $40,000 put becomes second-largest options bet ahead of February expiry next week

AI Summary3 min read

TL;DR

The $40,000 Bitcoin put option is the second-largest position ahead of Feb. 27 expiry, with $490M in notional value, indicating strong demand for crash protection. Traders balance rebound exposure with downside hedges as calls still outnumber puts overall.

Key Takeaways

  • •The $40,000 Bitcoin put option has $490M in notional value, making it the second-largest strike by open interest ahead of the Feb. 27 expiry.
  • •Traders are hedging against further losses with deep tail-risk protection while maintaining exposure to potential rebounds, as calls still outnumber puts overall.
  • •The $75,000 strike represents the max pain level with $566M positioned there, where a move above this price could reduce losses for call sellers.
  • •Bitcoin's decline from October highs has reshaped options positioning, with a put-to-call ratio of 0.72 showing upside bets dominate but significant downside insurance demand exists.
Open Interest by Strike Price (Deribit)
Open Interest by Strike Price (Deribit)

What to know:

  • The $40,000 put option is the second largest strike by open interest, with about $490 million in notional value, highlighting strong demand for crash protection into the Feb. 27 expiry.
  • Roughly $566 million is positioned at the $75,000 strike, the max pain level.
  • Calls still outnumber puts overall, showing traders are balancing rebound exposure with downside hedges.
  • The $40,000 put option is the second largest strike by open interest, with about $490 million in notional value, highlighting strong demand for crash protection into the Feb. 27 expiry.
  • Roughly $566 million is positioned at the $75,000 strike, the max pain level.
  • Calls still outnumber puts overall, showing traders are balancing rebound exposure with downside hedges.

The $40,000 put option has emerged as one of the most significant positions in bitcoin’s market ahead of the Feb. 27 expiry, highlighting strong demand for downside protection after a bruising selloff.

Options are derivatives that give holders the right, but not the obligation, to buy or sell bitcoin at a predetermined price before expiry. Put options act as insurance against price declines, paying out if BTC falls below a set strike.

The $40,000 put is the second-largest strike by open interest, with roughly $490 million in notional value tied to that level, underscoring appetite for deep tail-risk hedges. BTC has declined by up to 50% from its October highs and is now trading around $66,000, reshaping positioning across the board as traders hedge against further losses.

Data from Deribit, the Dubai-based exchange owned by Coinbase, shows that roughly $7.3 billion in bitcoin options notional value is set to expire at the end of the month.

Meanwhile, $566 million sits at the $75,000 strike, which also represents the max pain level. Max pain refers to the price at which the greatest number of options expire worthless, minimizing payouts to buyers. With the spot price trading below $75,000, a move higher into expiry could reduce losses for call sellers.

Although calls outweigh puts overall, with 63,547 call contracts versus 45,914 puts, positioning is not purely bullish. The put-to-call ratio of 0.72 indicates that upside bets still dominate, but the concentration of sizeable put open interest at lower strikes highlights clear demand for downside insurance.

Traders retain exposure to a rebound, but are simultaneously hedging against the risk of another sharp leg lower.

  • BTC trades near $67,000 and ETH near $1,970, with volatility fading after Feb. 5’s selloff.
  • Derivatives show stabilization, with open interest at $15.38 billion and funding positive
  • Elevated short-term implied volatility signals caution.
  • $218 million in liquidations and 97 of top 100 tokens in the red underscore fragile sentiment.

Disclosure & Polices: CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of Bullish (NYSE:BLSH), an institutionally focused global digital asset platform that provides market infrastructure and information services. Bullish owns and invests in digital asset businesses and digital assets and CoinDesk employees, including journalists, may receive Bullish equity-based compensation.

Visit Website