The $40,000 put option has emerged as one of the most significant positions in the bitcoin market ahead of the February 27 expiration, highlighting strong demand for downside protection after a violent selloff.
Options are derivatives that give holders the right, but not the obligation, to buy or sell bitcoin at a predetermined price before expiration. Put options act as insurance against price declines, paying out if BTC falls below a set strike.
The $40,000 put is the second largest strike of open interest, with about $490 million in notional value tied to this level, underscoring appetite for deep tail risk hedges. BTC has fallen by up to 50% from its October highs and is now trading around $66,000, changing positioning across the board as traders hedge against further losses.
Data from Deribit, the Dubai-based exchange owned by Coinbase, shows that about $7.3 billion in bitcoin options’ notional value is set to expire at the end of the month.
Meanwhile, $566 million sits at the $75,000 strike, which also represents the maximum pain level. Max pain refers to the price at which the largest number of options expire worthless, minimizing payouts to buyers. With the spot price trading below $75,000, a move higher into expiration could cut losses for call sellers.
Although calls outweigh overall, with 63,547 call contracts against 45,914 puts, the positioning is not purely bullish. The put-to-call ratio of 0.72 indicates that upside bets still dominate, but the concentration of significant put-open interest at lower strikes highlights a clear demand for downside insurance.
Traders maintain exposure to a rebound, but at the same time hedge against the risk of another sharp leg.
