The hidden force behind Bitcoin and Ether price swings: Options expiry

Key Takeaways:

• Options expiry creates volatility as traders lock profits, cut losses and reposition around large BTC and ETH contracts.

• Put-call ratios signal sentiment: Above 1 shows a bearish outlook, while below 1 points to bullish expectations.

• Max Pain theory suggests expiry prices gravitate to where the most contracts expire worthless, amplifying potential manipulation risks.Understanding expiry helps traders track key metrics, anticipate volatility and manage risk more effectively during these periods.

To most people, Bitcoin (BTC) and Ether (ETH) market prices can seem unpredictable. But look closer, and there’s a hidden force driving the infamous volatility: options expiries.

When large volumes of these derivative options contracts approach their expiry date, it sends ripples through the crypto markets. Understand this, and you’ll know when prices are more likely to move sharply.

1. What are option expiries in Bitcoin and Ether?

To understand option expiries, you first need to understand the fundamental concept of an option. It’s a more complicated trading method than spot trading.

Options are contracts that give the holders the right (not the obligation) to buy or sell BTC or ETH at a predetermined strike price before the contract expires.

Now, as a contract approaches expiry, it affects the price at which this contract option can trade. Near its expiry, its price tends to become more volatile.

When large amounts of options contracts are due to reach expiry at a similar time, it can send ripples through the traditional spot BTC and ETH markets, causing the underlying asset prices to make sharp moves.

There are two types of options contracts

Call options give the holder the right to buy, and put options offer the right to sell an asset for a specified price before it expires.

The balance between calls and puts delivers an indicator of the overall market sentiment. They essentially show future bets on where the market thinks prices will move. And if one outweighs the other, it can influence directional pressure on prices.

Along with the expiry date, a contract also has a strike price and a premium. These three key elements directly determine profitability, along with offering a mathematical framework that reflects expiry-related price movements.

Did you know? Unlike traditional markets, BTC options don’t run on fully standardized schedules. They can occur across multiple timeframes, but most commonly, they expire on the last Friday of every month at 08:00 UTC.

2. How do option expiries affect crypto market prices and volatility?

Let’s start with an example. If $5 billion worth of options contracts expire simultaneously, even a small percentage of these contracts being exercised or hedged could move the entire market.

Remember, option traders have the option to execute a contract. So, the full $5 billion in crypto wouldn’t be sold or bought necessarily.

When there is a large upcoming option expiry date on the market, you’re likely to see increased trading activity. It triggers heightened market activity as traders reposition, creating a surge in volume. This concentrated time window of trading amplifies price swings beyond normal market conditions.

When analyzing markets, you can see a clear correlation between option expiries and crypto price fluctuations. When it comes to BTC and ETH, you will be able to spot significant changes in market prices.

For example, if you look at the BTC volatility index, an event in June 2021 saw over $4 billion in BTC and ETH options set to expire. This led to a 5.80% increase in the volatility index on June 14, the highest peak in the last five years.

With BTC, the quarterly options expiries usually have a more pronounced impact on the market compared to the monthly expiries. Patterns like this help you understand which expiry events will create the most volatility and require attention in your trading.

Did you know? The world’s first options exchange for any type of asset was the Chicago Board Options Exchange (CBOE), which opened in 1973, decades before BTC launched.

3. Put-call ratios and market psychology take hold

When expiries approach, trading volatility increases as traders close positions to lock in profits or reduce losses. This creates a feedback loop that triggers further position adjustments and amplifies the volatility.

Using put/call ratios

To get a better temperature on which way the market is likely to move, you can use put-call ratios. They’re a useful sentiment indicator that shows insight into institutional and retail sentiment.

When the ratio is above 1, it indicates more bearish bets, while ratios below 1 tend to be more bullish, indicating potential price rises.

Max pain theory

Max pain theory is like a tug of war in the options markets.

An option buyer wants the stock to move in their direction. Option sellers want the opposite. The max pain is the price where the most options would expire worthless.

This is important, as large market participants and whales might attempt to push crypto prices toward the max pain point, influencing the price as they move closer to expiration dates.

It indicates shorter-term price movements while also locating potential support and resistance levels.

Market reversal

Savvy traders might also look past expiry dates. If there is evidence of extreme put-call ratios, this could signal that a potential market reversal is on the cards. If you start to see ratios hit historical extremes, it could mean that asset prices are oversold or overbought. This increases the chances of a reversal after expiry.

Did you know? In August 2025, the world’s largest options exchange, Deribit, processed over $14.6 billion in BTC and ETH options expiry contracts. It marks the highest single expiry notional on record for digital assets in 2025.

4. Actionable strategies for navigating options expiry volatility

Option expiries can send cascading ripples through the BTC and ETH markets. They can have a direct effect on the underlying asset price as traders look to reposition. So, how can you manage these events?

• Monitor key metrics: Track open interest, put-call ratios and max pain to gain early warning signals for volatility and directional bias.

• Position hedging: You can use options to protect your spot positions during high volatility expiry periods. A hedge can limit the downside while retaining upside opportunity. This could be critical when prices move 5% or 10% in hours.

• Diversification: It’s often recommended to spread risk across multiple assets and timeframes. This will minimize realized losses during expiry events. High single asset concentration over a short period can leave you exposed to major expiries.

• Time considerations: Marking key dates can help you prepare, avoid losses and capitalize on volatile periods.

• Use advanced tools: Advanced data analysis platforms like CoinGlass and CME Group calendars provide insights into options markets. The real-time data can give you a crucial edge over simple spot traders.

• Volume and liquidity: Understanding trading volume patterns along with liquidity can help you manage risk as expiry approaches. It’ll help you determine when liquidity typically dries up.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.