Fireworks – Crypto Set for $ 8 Billion OpEx for New Years Eve

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Submitted by bithedge

Unfortunately for any crypto options market maker who hopes to ring in the New Year with a party, one of the downsides of a 24/7 market is about to become very apparent as they are stuck in the making. celebrates with a record $ 8.2 billion option expiration in December. 31 – surpassing the previous high of $ 5.6 billion seen during the raging bull market in March, when cryptos were still 30% higher each month following a supply shock and narrative from institutional adoption has become overdriven.

Nowhere will the celebration be more apparent than in Wall Street’s darling new Ethereum, where the notional of the upcoming expiration is more than double that of any previous month:

And since ETH plans not only to go deflationary, but also to reduce energy consumption by 100 times, some also felt that it was worth waiting for the quarterly options in March when, for the first time, open interest on an expiration of Eth has exceeded that of Bitcoin. thanks almost exclusively to one or more * massive * buyers of the 15,000 calls. It has to be wondered if this is really just one entity that has spent millions on these options, racking up open interest to more numbers than most surrounding strikes combined. Is that you, Novogratz?

UBS sees the strike as a potential accelerator if ETH hits all-time highs again and, indeed, the position appears capable of generating up to $ 1 billion in delta buys if it expires in-the-money – although this author thinks this might be just a little too optimistic and by exiting just a year later such a buyer could catch the inevitable continuation of the bull market when the Fed reverses the course in the shortest bull cycle in history.

But anyway, although perhaps less “approach” compared to the previous figures … Bitcoin still occupies the first place for this month with its first roll-off of 5 billion dollars, which represents in makes half of all open interest!

For now, it seems that the underlying crypto markets are generally much further removed from the options process than stocks (which have largely become a derivative of options positioning and real rates). But the unprecedented size of this month’s outcomes, combined with holiday-level liquidity, means traders could expect a volatile start through 2022 …

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