Bitcoin Options Markets Post-Expiry: Max Pain Dynamics Show Trader Caution Amid Price Decline

As Bitcoin’s February options expired on the 27th, the markets have shifted focus to what the recent positioning revealed about trader sentiment. With BTC now trading at $63.88K—down 3.29% over the last 24 hours—the options data from the recently-closed expiry window offers crucial insights into how market participants are managing risk. The analytics show that deep out-of-the-money protective positions dominated the trading activity, signaling that traders were preparing for significant downside scenarios even as bullish exposure remained the larger share of overall positioning.

The aftermath of the February expiry underscores a key tension in Bitcoin derivatives markets: while crash fears have intensified, the market remains cautiously optimistic on broader trends. The second-largest options strike by open interest was at $40,000, where roughly $490 million in notional value was concentrated. This level served as a critical insurance floor for traders worried about a potential collapse following Bitcoin’s sharp pullback from October peaks—a drawdown that at one point exceeded 50% from historical highs.

Understanding the Options Expiry Impact and Max Pain Positioning

The February 27 expiry involved approximately $7.3 billion in Bitcoin options notional value, making it a significant event for short-term price action. Deribit data revealed that the concentration of puts at the $40,000 strike represented market participants’ attempt to purchase tail-risk protection against an extreme downside scenario. For many traders, this level represented the edge of what they considered a “live crisis” scenario rather than a base case.

The max pain concept played a starring role in this expiry: the $75,000 strike accumulated roughly $566 million in open interest and represented the price point where the greatest number of options would expire worthless. With Bitcoin trading below this level going into expiry week, the dynamic created pressure favoring option sellers and writers. A move higher would have reduced losses for those positioned for upside, while keeping the market defensive.

Calls vs. Puts: What the Ratio Really Tells Us

Despite the surge in protective put buying, the overall options market remained tilted toward bullish exposure:

• Call contracts: 63,547
• Put contracts: 45,914
• Put-to-call ratio: 0.72

This 0.72 ratio—where calls outnumber puts by roughly 40%—reveals that traders weren’t abandoning upside conviction. Instead, they were executing a hedging strategy: maintaining meaningful exposure to a Bitcoin rebound while simultaneously insuring portfolios against a sharp shock lower. The max pain strike at $75,000 provided an anchor point for this dual positioning.

This approach reflects a market that is defensive rather than capitulative. Traders appeared focused on risk management rather than outright bearish bets, suggesting they still expected Bitcoin to eventually move higher even while protecting against near-term downside surprises.

What’s Next After Expiry: The Dealer Rebalancing Factor

As the expiry concluded and positions rolled into March cycles, a critical dynamic emerged: dealers rebalancing their hedges around key strike levels. The concentration of interest at both $40,000 and $75,000 meant that price movements into expiry could have accelerated as market makers adjusted their exposure.

With BTC now trading at $63.88K following the 3.29% decline, the options market structure continues to reveal where traders believe important support and resistance lies. The max pain level remains a focal point for understanding dealer positioning, as does the defensive floor at $40,000. Going forward, watch whether traders continue accumulating puts at lower levels or if conviction gradually shifts back toward call accumulation.

The February expiry data ultimately painted a picture of a market in transition—one where protective options strategies have become mainstream risk management tools, even among traders maintaining long-term bullish positioning on Bitcoin.