Major Bitcoin (BTC) and Ethereum (ETH) options positions worth a combined $2.4 billion are scheduled to expire on May 3rd, setting the stage for potential increased volatility in the crypto markets.

Options are derivative contracts that allow traders to speculate on future price movements without owning the underlying asset. There are call options (betting the price will go up) and put options (betting it will go down).

Data from leading crypto derivatives exchange Deribit reveals the specifics for this week's large expiries:

Bitcoin Options Expiry:

23,367 BTC contracts worth $1.39 billion expiring
Put-to-call ratio of 0.5 (slightly bullish)
Max pain price of $61,000

Ethereum Options Expiry:

334,248 ETH contracts worth $1 billion expiring
Put-to-call ratio of 0.37 (bullish)
Max pain price of $3,000

The "max pain" price refers to the strike price at which the greatest number of option holders would experience losses upon expiration. For Bitcoin, this is $61,000 and for Ethereum it's $3,000 based on current prices.

Put-to-call ratios below 0.7 are considered bullish, while ratios above 1.0 are bearish sentiment. So the Deribit data implies slightly bullish positioning overall across over $2 billion worth of expiring options.

Volatility Often Follows Expiries Historically, the expiration of large options positions has often catalyzed short-term volatility and price moves in the spot markets for Bitcoin and Ethereum as traders re-position.

Both BTC and ETH have experienced bearish price pressure over the past couple weeks, with Bitcoin dipping below $60,000 and Ethereum under $2,900 at one point. Major expirations can exacerbate such moves.

However, markets frequently see quick reversals and a return to normal trading ranges within days after an options expiry event. Traders will be closely watching price action around the puts and calls centered around $61,000 BTC and $3,000 ETH this week.

Overall, the $2.4 billion expiry highlights the growing size and importance of crypto derivatives markets. As adoption increases, so does the potential for large options expiries to increasingly impact underlying spot prices.