The $40,000 put option became one of the largest positions in the Bitcoin market ahead of its February 27 expiration, underscoring the strong demand for downside protection following a sharp sell-off.
Options are derivative products that give their holders the right, but not the obligation, to buy or sell bitcoins at a predetermined price before they expire. Put options act as insurance against falling prices, paying out if BTC falls below a set strike price.
The $40,000 put is the second-largest open interest raise, with a notional value of around $490 million tied to that level, underscoring the appetite for deep tail risk hedges. BTC has fallen as much as 50% from its October highs and is now trading around $66,000, reshaping positioning across the board as traders hedge against further losses.
Data from Deribit, the Dubai-based exchange owned by Coinbase, shows that approximately $7.3 billion in notional value of Bitcoin options are set to expire at the end of the month.
Meanwhile, $566 million is at the $75,000 strike level, which is also the maximum pain level. Maximum pain refers to the price at which the greatest number of options expire worthless, thereby minimizing payouts to buyers. With the spot price below $75,000, a move higher until expiration could reduce losses for call sellers.
Although calls overall exceed puts, with 63,547 call contracts compared to 45,914 puts, the positioning is not purely bullish. The put/call ratio of 0.72 indicates that upside bets still dominate, but the concentration of significant open interest at lower strike prices highlights clear demand for downside insurance.
Traders maintain their exposure to a rebound, but simultaneously hedge against the risk of another sharp decline.
