Tomorrow, May 23, 2025, crypto options worth over $3.3 billion will expire, which may cause significant volatility in the market.
Current prices and Max Pain levels
Bitcoin (BTC):
Current price: $110,777
Max Pain: $100,000
Ethereum (ETH):
Current price: $2,656
Max Pain: $2,200
The Max Pain level is the price at which option sellers (usually market makers) lose the least amount of money while buyers lose the most. Often, the asset's price tends to approach this level by the time of the option expiration.
Possible scenarios of events
1. Consolidation or correction to the Max Pain level:
For BTC, this could mean a move towards $100,000.
For ETH - a decline to $2,200.
Such movement can be triggered by actions of market makers aiming to minimize their losses.
2. Maintaining the current trend:
If the bullish momentum is strong enough, prices may hold above the Max Pain levels. This will lead to losses for option sellers and may increase volatility after expiration.
3. Increased volatility after expiration: After options expire, market participants may open new positions, leading to sharp price movements.
Recommendations for traders
Be cautious when opening new positions during periods of high volatility, especially near the time of option expiration.
Watch for support and resistance levels, especially near Max Pain levels.
Use stop-losses and take-profits to protect your positions from sharp market movements.