Bitcoin derivatives poised for 'quadruple witching' volatility as Friday's quarterly options expiry approaches, analyst says

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The bitcoin options market is braced for heightened volatility, with over 20% of OI on Deribit set to expire in-the-money.

The bitcoin options market is braced for heightened volatility, with over 20% of open interest on Deribit set to expire in-the-money , several analysts said to The Block on Wednesday.

A quadruple witching occurs four times a year, around the end of each quarter, when contracts for index futures, index options, options, and futures all expire simultaneously. This event often leads to increased volatility and trading volume. Because a significant portion of this open interest is usually in-the-money, this suggests there is potential for large-scale trading activity as these contracts approach expiration.

"This could indicate that traders are still continuing to take advantage of elevated prices farther out on the curve to lock in the basis. Typically traders wind down these positions when the opportunity to capture higher future prices declines," Dunn told The Block.

 

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