Nearly $2.7 billion in bitcoin options expire this Friday, November 6, just hours before the release of the US jobs report. The real risk does not lie only in the amount of the contracts, but in this discrepancy which forces the market to close its positions before knowing the data likely to modify rate expectations.
In brief
- Nearly $2.7 billion in Bitcoin options expire this Friday, November 6, ahead of the release of the U.S. jobs report.
- This five and a half hour lag exposes investors to two distinct phases of volatility.
- The cost of protections is rising as operators seek to hedge against reactions to employment figures.
- The threshold of $79,000, associated with the expiry of the options, could lose its influence after their settlement.
- US employment data could determine whether bitcoin returns to $80,000 or remains under pressure.
Bitcoin market balances bets ahead of jobs report
Affected options are set to expire at 8:00 a.m. UTC on Deribit, based on a settlement price calculated from the average of the bitcoin index between 7:30 a.m. and 8:00 a.m. The October jobs report won’t be released until 1:30 p.m. UTC, five and a half hours later.
This organization creates two distinct sequences. The market will begin by settling accumulated bets on the price. It will then have to reposition itself when job creation, the unemployment rate and the evolution of wages are revealed.
The main figures show the importance of this meeting:
- Around 33,400 BTC worth of options expire on Deribit;
- Their notional value is around $2.6 to $2.7 billion;
- Nearly 25,000 BTC are for call options, compared to around 8,400 BTC for put options;
- The ratio between put and call options is around 0.34 to 0.37;
- The level of “maximum pain” is calculated at 79,000 dollars;
- The main bullish positions are concentrated at $82,000 and $85,000.
The high proportion of call options indicates that many traders had anticipated an increase. However, it does not mean that bitcoin must necessarily rebound. Some contracts can be used to hedge other positions, while their profitability depends on the price reached at the specific time of settlement.
The figure of $2.7 billion should also be interpreted with caution. It corresponds to the notional value of open contracts, and not to an amount that will be automatically injected into or withdrawn from the market.
Five hours without a net drives up the cost of protection
The puts expiring on November 6 do not cover any reaction to the jobs report. An investor protected until 8 a.m. UTC may therefore find himself exposed at 1:30 p.m., when the American publication could cause a sudden rise in the dollar or bond yields.
The market is already charging for this difference in schedule. On November 5, a put option with a strike price of $80,000 and expiring the next day cost approximately $393 per hedged BTC. The same contract expiring on November 7, therefore after the employment figures, was offered at around $682.
The additional coverage thus cost around 74% more. This gap does not only measure the fear surrounding the American report. It also includes an additional day of validity and liquidity conditions. It nevertheless shows that time itself becomes a costly commodity when two major events are not aligned.
The protection is proving even more expensive for investors looking to navigate both the jobs report and the US inflation release scheduled for November 10. An $80,000 put option expiring on November 13 was priced around $1,445, more than three times the price of the contract expiring on November 6.
Expectations are for around 65,000 job creations in October and a stable unemployment rate of 4.2%. A better-than-expected report could strengthen the prospect of high rates, supporting the dollar and weighing on bitcoin. Very weak figures could, conversely, encourage expectations of monetary easing, while fueling fears of an economic slowdown.
After maturity, the 79,000 dollars lose their power
The maximum pain level at $79,000 represents the price at which option holders would collectively receive the least intrinsic gains. It constitutes a benchmark observed before the deadline, but not a reliable forecast.
Once contracts are settled, this level loses much of its influence. Maturity hedges disappear, traders open new positions and the jobs report becomes the main catalyst. The market can therefore move in one direction before 8 a.m. UTC, then make an opposite movement after 1:30 p.m.
The risk of Friday rests precisely on this rupture. Thus, investors will not go through a single event, but two successive markets: the one dominated by options, then the one governed by rate expectations.
After the recent fall of bitcoin towards $75,000, the reaction to the American figures will be more important than the possible rapprochement with $79,000. The deadline may disrupt the early hours of the session, but employment will determine whether the market returns to $80,000 or remains under pressure heading into the weekend.
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