Analysis: $1.55 billion in Bitcoin options expire on Friday, more bearish outlook

$1.55 billion in Bitcoin options are set to expire on April 23, and the recent plunge in Bitcoin to $51,000 has given shorts a $340 million advantage.
Bitcoin prices are slowly recovering after experiencing a sharp 16% correction in the early hours of April 18.
While some analysts blamed the “9,000 BTC transfer to Binance,” others focused on the drop in Bitcoin’s hashrate caused by a Chinese coal mine accident. Whatever the reason behind Bitcoin’s drop to a low of $51,200, options market makers were forced to adjust their exposure.
Typically, arbitrage platforms seek non-directional exposure, meaning they do not directly bet on Bitcoin moving in any particular direction. However, neutral option exposure often requires dynamic hedging, meaning positions must be adjusted based on the price of Bitcoin.
The risk adjustment for these arbitrage platforms usually involves selling Bitcoin when the market falls, therefore, this further increases the pressure for long liquidations. Therefore, it makes sense to understand the current risk level as the April 23 option expiration date approaches. We will try to dissect whether shorts will benefit from a Bitcoin price of $50,000.
Initially, it seemed that the price of Bitcoin was balanced, with Bitcoin rising 74% in three months to a record high of $64,900 before the correction on April 18. Therefore, it is natural that investors would make more use of protective options.

Bitcoin accumulator options on April 23 Source: Bybt
While neutral to bullish options offer buyers upside price protection, the opposite is true for more bearish options. By measuring the risk exposure at each price level, traders can gain insight into the trader's bullish or bearish positions.
The total number of contracts due to expire on April 23 is 27,320 BTC, equivalent to $1.55 billion at the current price of $56,500. However, shorts and longs are clearly balanced, with call options accounting for 45% of open interest.
After the recent plunge, bears have a considerable advantage. While the situation initially seems balanced, it must be considered that the $64,000 call options and higher priced options are virtually worthless with less than three days left until expiration. If these $6,400 call contracts, which are currently trading below $50, are removed, a more bearish situation emerges.
Neutral to bearish options make up 70% of the remaining 19,930 contracts. Considering the current Bitcoin price, open interest is $1.13 billion, which makes put options $450 million more than call options.
Bitcoin’s 13% pullback from its all-time high on April 14 caught bulls off guard. There are only 3,000 BTC, or 24% of all call options, for Bitcoin prices below $58,000.
Meanwhile, neutral to bearish options have 9,000 BTC contracts at strike prices of $55,000 and above. This difference represents $340 million in open interest in favor of shorts.
As it stands, the expiring contracts between $57,000 and $64,000 are balanced, suggesting that bears are motivated to push prices lower on April 23. (Cointelegraph)