About $11 billion in Bitcoin options—roughly 135,000 BTC, and about a third of all Bitcoin options open interest on the crypto options exchange Deribit—are set to expire on Friday.

The expiry lands with Bitcoin trading near $81,500, a day after the Federal Reserve held interest rates steady while two of its officials voted to raise them. Max pain—the price at which option sellers pay out the least—sits at $78,000 against that market price, and roughly 86% of the contracts are out of the money.

Even investors who never trade options have a stake in the event. Because the traders who sold these contracts must buy or sell actual Bitcoin to hedge their positions as prices move, that hedging activity can add to market swings even when no news is behind them. Once the contracts expire, that hedging obligation ends with them.

An option is a contract that gives its holder the right, but not the obligation, to buy (a call) or sell (a put) Bitcoin at a fixed price, known as the strike, by a set date. Friday's batch covers about 135,000 Bitcoin in contracts—roughly 88,700 calls and 46,500 puts, according to Deribit's data. That equals about a third of all Bitcoin options open on the exchange and roughly 70% more than the $6.4 billion that expired in August.

The put-to-call ratio, which compares the volume of bets on a decline with bets on a rally, stands at 0.52, meaning calls outnumber puts nearly two to one—a tilt that reflects optimism about prices moving higher.

The $11 billion figure is notional value—the face value of the contracts at today's price—not money actually changing hands. With about 86% of the contracts out of the money, meaning they would be worthless at current prices, settling at today's level would move roughly $130 million, about 1% of the headline figure.

Traders watch Bitcoin options expiry day as one of the key events for their fundamental analysis, and Federal Reserve policy is another major catalyst to consider. With about a third of Deribit's open Bitcoin options expiring in a single session, the event pulls a proportionally large share of the market's hedging activity into one settlement. The Fed held its benchmark rate at 3.75% to 4.00% on Wednesday in a 10-2 vote, with two dissenters favoring a hike, and expectations have been rising for another increase this year. The 10-year Treasury yield closed at 5.05%. Interest rates ripple through the entire economy, since investment in riskier assets and businesses becomes less attractive than lending to the government through Treasuries.

Traders also track max pain, the price at which the most contracts expire worthless and sellers pay out the least. Deribit's open interest places it at $78,000, about $3,500 below the market—though the metric describes positioning and does not predict where Bitcoin will settle. After all, this is crypto, where wild movements are far from unusual.

The heaviest call bets sit at $95,000 and $100,000, about 16% and 23% above the current price, while the biggest put cluster is at $70,000, roughly 14% below. Friday's expiry has also seen the most trading of any Bitcoin options expiry on Deribit over the past 24 hours, with more than 6,000 contracts changing hands.

Friday's batch is smaller than the $15 billion expiry in March, but it is about three times the size of the $3.6 billion expiry from April 2021.

The next major test comes on December 25, when about 135,500 Bitcoin in options are already set to expire—roughly the same size as Friday's batch and about two weeks after the Fed's next meeting, on December 8-9.

Disclaimer: The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.