360 Surveillance on Asset Vaults
Bitcoin and Ethereum are staring down a $16 billion options expiry event on October 31, 2025. That's a hefty chunk of change, even in crypto land. The immediate question is whether the "max pain" theory will hold true, or if the market has other plans.
Options Data: Bullish Bets Capped by Caution?
Decoding the Options Data
The data comes primarily from Deribit, a major crypto derivatives exchange. We're talking about 145,482 Bitcoin contracts, representing a notional value of $13.28 billion, and another $1.73 billion in Ethereum options. The Bitcoin put-to-call ratio sits at 0.54, indicating a generally bullish sentiment. More traders are betting on gains than losses. However, as Deribit's analysts point out, recent market pullbacks have reshaped positioning.
Specifically, traders who were long puts (betting on a price decrease) apparently took profits when Bitcoin dipped into the $81,000 to $82,000 range. They’re still hedging, of course, with protective puts around the $80,000-$85,000 strikes. But the real action, according to Deribit, is a "bullish EoY Dec 100-106-112-118k Call Condor." This options structure, initially worth around $6.5 million in premium, is designed to capitalize on upside movement within a specific range.
Here's where it gets interesting. The ideal scenario for the "Call Condor" buyer is a Bitcoin price settling between $106,000 and $112,000 by December 26, with a potential 10:1 payoff. Such aggressive positioning suggests that some traders, despite recent corrections, are anticipating a significant year-end rally. But, and this is a big but, other market participants have been actively capping the upside through overwriting strategies (selling calls). This creates a tension between long-dated bullish conviction and near-term caution, potentially leading to heightened volatility during the settlement window.
Now, let's talk about Ethereum. The data shows 387,010 calls open versus 187,198 puts, totaling 574,208 contracts. The put-call ratio is 0.48. Unlike Bitcoin, the positioning is less extreme, with open interest more evenly distributed across major strikes. The key question is whether Bitcoin volatility will spill over into the Ethereum market.
Max Pain: Theory vs. Reality (and Market Manipulation?)
The "Max Pain" Paradox
The "max pain" theory suggests that the price of an asset tends to gravitate towards the strike price where the maximum number of option holders will experience losses as expiry nears. For Bitcoin, the "max pain" point is $100,000. Given that Bitcoin is currently trading around $91,389, this theory implies a potential upward price movement. For Ethereum, the max pain level is $3,400, while the current price is hovering around $3,014. Again, this suggests upward pressure.
However, the market rarely adheres perfectly to theoretical models. The question is whether market makers will successfully push prices towards these "max pain" levels, or if the underlying bullish sentiment will overpower their efforts. This is also where the "max pain" theory gets a lot of flak. It's hard to prove causality (did the price move to *cause* maximum pain, or was it just coincidence?). I've looked at dozens of these expiry events, and the "max pain" target is hit less often than the gurus would have you believe.
Fleet Asset Management Group (FLAMGP) noted that Bitcoin had briefly moved above $88,000 following a recent decline. They highlighted the increased demand for protective positions in the options market, with the $80,000 Bitcoin put option becoming one of the most actively traded contracts. This reflects the market's overall caution (or, to be more exact, the market *should* be cautious).
The press release by FLAMGP is filled with marketing speak, but their AI-based risk monitoring system (the FAMG 3.0) is interesting. It supposedly includes real-time market monitoring, volatility modeling, and automated stop-loss protocols. Whether it actually works as advertised is another question entirely. You can read more about their analysis in FLAMGP Provides Market Analysis and Outlines Institutional Risk-Management Approach.
Bitcoin's $16B Options Expiry: Tug-of-War or Trap?
Cracks in the Bull Case?
Here's the part of the report that I find genuinely puzzling: the persistent overwriting of calls at the $100,000 and $105,000 levels for December and January. Someone is actively betting *against* a major Bitcoin rally. Why? Are they hedging against other positions? Do they have inside information (unlikely, but you never know)? Or do they simply believe that the market is overextended?
This divergence in opinion—the aggressive "Call Condor" versus the persistent call overwriting—creates a precarious situation. It's a tug-of-war between bullish and bearish forces, with the $16 billion options expiry acting as the rope. Which side will win?
The "Smart Money" Is Still Shorting
The data suggests that while there's plenty of bullish exuberance, a significant portion of the "smart money" is still hedging or outright betting against a major Bitcoin rally. The "max pain" theory might offer a temporary roadmap, but the underlying currents of the market suggest a more complex and uncertain future.
