$750 Million Bitcoin Options Expiry Looms as Traders Brace for Pre-Halloween Volatility Surge

Cryptocurrency traders were on high alert on October 26, 2020, as a massive wave of Bitcoin and Ethereum options — totaling over $750 million in notional value — approached their October 30 expiry date. With Bitcoin having recently touched a 2020 high of $13,490 and the U.S. presidential election just days away, the convergence of these events created a powder keg of potential volatility that had derivatives analysts watching closely.

TL;DR

• $750 million in Bitcoin options set to expire on October 30, 2020, according to Skew data
• 61,000 BTC options expiring, with 40,000 held on Deribit exchange
• 190,000 ETH options worth approximately $76 million also expiring the same day
• Bitcoin had touched a 2020 high of $13,490, driven by DBS bank exchange news
• Over 7% of open interest concentrated at the $13,000 strike price
• Deribit warned of expected volatility through U.S. election week

The Scale of the Expiry

Data from analytics firm Skew.com revealed the staggering size of the upcoming options expiry. Approximately 61,000 Bitcoin options contracts — representing more than $750 million in notional value — were set to expire on October 30. Deribit, the exchange holding the lion’s share of crypto options, accounted for 40,000 of those contracts.

The Ethereum side was also significant, with 190,000 ETH options worth approximately $76 million expiring on the same date. Of these, 164,000 were held on Deribit. The combined expiry represented one of the largest options events in crypto history at that point, and market participants were keenly aware of the potential for sharp price movements.

Bitcoin’s 2020 Rally Sets the Stage

The options expiry came at a critical juncture for Bitcoin. The leading cryptocurrency had surged to a 2020 high of $13,490 on the previous Tuesday, with the rally partly attributed to news that Southeast Asia’s largest bank, DBS, was planning to launch a digital asset exchange. As of October 26, Bitcoin was trading at approximately $13,082, representing a slight pullback from the highs but maintaining strong bullish momentum with an 11.35% gain over the past seven days.

Ethereum, meanwhile, was trading around $393.89, down 3.04% on the day but still up 3.67% over the week. The broader crypto market showed mixed signals, with total capitalization hovering around $390 billion.

The $13,000 Strike Concentration

Deribit’s analysis revealed a particularly interesting concentration of open interest around the $13,000 strike price. Over 7% of the total expiry open interest was fixated at this level, creating a potential magnet for price action. The exchange noted that significant call option positions existed at the $12,000, $12,500, $13,000, and $14,000 strikes, each with more than 2,000 BTC in open interest.

Skew observed that the largest put position was at the $9,000 strike, with over 5,000 options open. Based on where October volatility was marked — below 40 — Skew suggested that dealers were likely net long, hedging against overwriters who had sold calls at these elevated strikes.

Election Week Uncertainty

Adding to the complexity, the October 30 expiry fell just days before the November 3 U.S. presidential election. Deribit explicitly noted in its analysis that the BTC options term structure showed humps indicating expected sharp price movements during the election week of October 30 through November 6.

Similar to traditional markets, the increased uncertainty was priced into options through elevated implied volatility. Deribit projected that this heightened volatility environment was likely to persist at least through the end of Q4 2020, as traders grappled with election outcomes and their potential impact on monetary policy and institutional crypto adoption.

A Pattern of Uneventful Expiries

Despite the dire warnings, some market observers pointed to the growing history of options expiries that failed to deliver the expected fireworks. On September 25, 2020, more than 87,000 Bitcoin options had expired with Deribit holding 67,000 of those contracts — and the event passed with remarkably little price disruption.

This pattern suggested that while large options expiries create conditions for potential volatility, they do not guarantee it. Market makers had become increasingly sophisticated in managing their delta hedges, and the growing liquidity in crypto derivatives markets meant that expiry-related dislocations were becoming less severe over time.

Altcoin Market Snapshot

While options traders focused on Bitcoin and Ethereum, the altcoin market showed notable movements on October 26. Polkadot’s DOT token surged 9.04% to $4.73, making it one of the day’s strongest performers among major cryptocurrencies. Kusama (KSM) led all gainers with a 32% rally, while Curve DAO (CRV) jumped 21%. On the downside, Filecoin (FIL) dropped 12%, giving back all of its previous day’s 8.2% gains.

Why This Matters

The $750 million Bitcoin options expiry of October 2020 marked a maturation milestone for crypto derivatives markets. The sheer size of the expiry — combined with the concentration of positions around key strike prices and the overlay of U.S. election uncertainty — demonstrated that crypto had evolved from a niche asset class into one where institutional derivatives activity could shape price discovery. Whether the expiry would prove to be a volatile catalyst or another non-event, the data itself was invaluable: it gave traders unprecedented visibility into market positioning and sentiment. As the crypto options market continued to grow, these expiry events would become regular features of the market calendar, each one offering new insights into how institutional participants were positioning themselves in the digital asset space.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Options trading involves significant risk. Always conduct your own research before making any investment decisions.