The $40,000 put option has emerged as one of the most important positions in the Bitcoin market ahead of the Feb. 27 expiration, highlighting strong demand for downside protection after a steep selloff.
Options are derivatives that give the holder the right to buy or sell Bitcoin at a predetermined price before expiration. Put options act as insurance against falling prices and pay out if: $BTC Below set strike.
The $40,000 put is the second-largest open interest strike, with approximately $490 million in notional value tied to that level, underscoring the appetite for deep tail risk hedging. $BTC has fallen as much as 50% from its October high and is now trading around $66,000, with traders repositioning across the board as they hedge against further losses.
About $7.3 billion in notional value of Bitcoin options is set to expire at the end of this month, according to data from Deribit, a Dubai-based exchange owned by Coinbase.
Meanwhile, $566 million sits at the $75,000 strike, which also represents the highest pain level. Maximum pane refers to the price at which the maximum number of options becomes worthless and the buyer pays the least amount. Spot prices are trading below $75,000, so a rally toward expiration could reduce losses for call sellers.
While calls generally outnumber puts, with 63,547 call contracts to 45,914 puts, the positioning is not purely bullish. While the put-call ratio of 0.72 indicates that upside bets remain dominant, the concentration of significant put interest at low strike prices highlights a clear demand for downside insurance.
Traders are maintaining exposure to a rebound, but at the same time hedging the risk of another sharp decline.
