February's Largest Derivatives Settlement: How Will $8.72 Billion Options Expiry Affect BTC and ETH Markets?

On February 27, 2026, the crypto derivatives market experienced its largest settlement event of the month. According to mainstream options exchanges, Bitcoin and Ethereum options contracts with a notional value exceeding $8.72 billion are expiring today. This massive settlement accounts for about 20% of the current market open interest, and its scale and structure have sparked widespread concern over short-term spot price volatility.

Currently, according to Gate.io data, as of February 27, 2026, Bitcoin is priced at $67,700.8 USD, and Ethereum at $2,036.79 USD, both significantly below their respective maximum pain points. This article will objectively analyze the background of this expiration, dissect the mainstream market narratives, and explore potential multi-scenario evolution paths.

Nearly $9 Billion Monthly Settlement

The options contracts expiring today are mainly composed of Bitcoin and Ethereum options. Bitcoin options number approximately 114,705 contracts with a notional value of about $7.74 billion; Ethereum options number around 478,992 contracts with a notional value of approximately $975 million.

Bitcoin options expiring. Source: Deribit

Ethereum options expiring. Source: Deribit

In terms of options types, although the market generally focuses on the put/call ratio, the data shows a complex game of positions. Bitcoin’s put/call ratio is about 0.73, Ethereum’s approximately 0.77, indicating a slight dominance of call options in terms of open interest. However, the effectiveness and profitability of these contracts heavily depend on the final settlement price.

Derivatives Nodes Amid February’s Weak Volatility

Reviewing the market since February, overall crypto prices have been in a weak oscillation. In early February, Bitcoin briefly tested the psychological level of $60,000 USD. Although there was a rebound toward the end of the month, the overall price remains significantly below last month’s peak.

In this context, the structure of the expiring options positions today shows typical “defensive” characteristics. Despite a higher volume of call options, many contracts have strike prices concentrated above $75,000 USD. With the spot price hovering around $68,000 USD, these high-strike call options are deep out-of-the-money, with a high risk of expiring worthless. This means that although the nominal number of bullish positions is large, their actual effective “combat power” has been greatly weakened.

Max Pain and Position Distribution

Max Pain Analysis

The “max pain” point is the strike price at which the maximum number of options contracts would expire in-the-money for sellers, causing the greatest loss for buyers. According to Deribit data, this month’s max pain for Bitcoin is at $75,000 USD, and for Ethereum at $2,200 USD.

As of February 27, 2026, Bitcoin’s spot price at $67,700.8 USD and Ethereum at $2,036.79 USD are both well below their respective max pain points. This price gap indicates that most options are out-of-the-money for buyers, favoring sellers or market makers.

Implied Volatility Signals

Implied volatility (IV) is a key indicator of market expectation divergence. Data shows that despite some rebound, the market remains cautious. Bitcoin’s DVOL index (implied volatility index) is around 53, with a percentile of 87.7%, indicating high short-term option premiums. Ethereum’s implied volatility remains near 65%, significantly higher than Bitcoin’s, reflecting higher market pricing of short-term uncertainty.

BTC DVOL Index, Source: Deribit

Fact: Options expiry data shows max pain well above spot prices, with implied volatility rising sharply before expiry.

View: High implied volatility generally indicates market pricing of potential tail risks.

Speculation: Market makers may have hedged through spot markets before expiry, intensifying spot price stickiness or narrow oscillations.

Coexistence of Bottom-Fishing and Panic

Current market sentiment shows a clear split.

On one hand, panic sentiment has eased but not disappeared. During the early February plunge, the 25-delta skew dropped to around -30, reflecting strong demand for downside hedging. As the market stabilized, this indicator recovered to between -8 and -9, indicating that extreme panic buying (buying puts for hedging) has subsided.

On the other hand, bullish structural forces are emerging. According to Greeks.live, before this expiry, there have been large block trades of mid- to long-term call options, suggesting some funds see medium-term value at current levels and are positioning for a rebound with longer-dated options.

However, overall sentiment analysis suggests a lack of new capital inflows, with a “stock game” characteristic. Pessimistic voices still dominate social media, and market confidence has not truly recovered with the slight price rebound.

Will “Settlement Be Followed by Rebound” Repeat?

In derivatives markets, there is a narrative that “settlement leads to rebound,” meaning that after negative news (option expiry, futures settlement), the large short positions that suppress prices disappear, allowing prices to recover.

This logic has some validity because, before expiry, market makers typically hold large spot hedges. When options expire, these hedges are unwound, potentially releasing selling or buying pressure. But two variables need to be considered:

• Large pain point gap: Since spot prices are far from the max pain point, seller pressure is much less than the pressure from buyers’ zeroing out. This means that after expiry, sellers have less urgent need to buy back.
• Macro relevance: Currently, Bitcoin’s 90-day correlation with the Nasdaq 100 remains high. This suggests that even if internal derivatives pressures are relieved, external macro factors (such as tech stock trends, interest rate expectations) could dominate short-term market direction.

Strengthening Derivatives Dominance

This $8.72 billion options expiry, though routine monthly settlement, reveals structural insights worth noting.

First, the influence of the options market on spot prices continues to grow. As open interest, especially Bitcoin’s, reaches recent highs, derivatives pricing power consolidates further. Spot price volatility increasingly depends on gamma hedging liquidity and settlement mechanics in the options market.

Second, market stratification intensifies. Institutions and professional traders profit through complex options strategies (like spreads), while retail traders holding simple positions face greater time decay under the max pain mechanism.

Finally, volatility becomes the new normal. Even with relatively stable prices, implied volatility fluctuations reflect internal market tension. Ethereum’s relatively higher volatility premium may indicate more future uncertainties in its ecosystem or market narrative.

Multi-Scenario Evolution

Based on current data, three main paths are possible after this options expiry:

Scenario 1: Volatility Converges Post-Settlement (Neutral-Bullish)

• Logic: As contracts settle, major uncertainties diminish. Implied volatility naturally declines, and spot prices, freed from gamma hedging effects, slowly oscillate upward driven by fundamentals or macro factors.
• Conditions: No abnormal spikes before or after expiry; prices stabilize above $66,000 USD.

Scenario 2: Expiry-Driven Sell-Off (Bearish)

• Logic: Large call options expire worthless, causing losses for buyers and reducing overall buying power. If macro conditions weaken simultaneously, a new wave of downside may push prices toward recent lows around $60,000 USD.
• Conditions: Spot cannot hold above $68,000 USD after expiry, with declining volume.

Scenario 3: Black Swan Hedging Vacuum (Short-term Volatility, Unclear Direction)

• Logic: Protective puts bought earlier lose their hedge after expiry. If institutions reduce overall risk exposure, funds may flow out, causing disorderly oscillations.
• Conditions: Unpredictable choppiness within 24 hours post-expiry, with volume drying up.

Fact: Options have expired, and open interest has decreased.

View: Derivatives settlement will release short-term price pressures.

Speculation: The actual market direction depends on how market makers and large traders rebuild their positions post-expiry, along with macro sentiment.

Conclusion

The $8.72 billion options expiry on February 27 marks both a settlement of the past month’s market sentiment and a potential starting point for future trends. Data shows that, although extreme panic has eased, Bitcoin and Ethereum remain in a delicate phase of “prices below pain points, confidence weak despite data.”

In the absence of new liquidity and clear macro catalysts, this expiry appears more as a systemic release of pressure rather than a trend reversal signal. For market participants, monitoring implied volatility changes and whether spot prices attract new buying interest will be more meaningful than focusing solely on the expiry outcome.