Bitcoin The stock has surged over $110,000 on renewed optimism about US-China trade relations. The surge means BTC is now trading at a level where market makers could add price volatility ahead of Friday’s billion-dollar options expiration.
Data from the Deribit-listed options market, tracked by Emberdata and Deribit Metrics, shows that $13 billion in Bitcoin options – calls and puts – are set to expire on Friday. Specifically, dealers and market makers have negative gamma exposure at the $100,000 and $111,000 strike prices, meaning they have sold (written) more options than they bought at these levels.
In such scenarios, market makers protect their positions by trading with the market to maintain pure delta (market)-neutral risk – buying when prices rise and selling when prices fall.
As expiration approaches, their hedging activity typically intensifies. This is because gamma sensitivity increases as expiration time approaches, especially for at-the-money (ATM) or near-the-money options, such as those at the $110K and $111K strikes.
The chart shows that Dealer Gamma is largely negative between $105,000 and $111,000, indicating the possibility of increased trading activity around these levels.
Beyond this range, the gamma exposure becomes net positive at $114,000.
All told, Bitcoin’s next big move may have less to do with fundamentals than mechanical hedging flows from options dealers.