Bitcoin's $40K Put Option Surges as Second-Largest Bet Ahead of February Expiry - What This Means for BTC

Bitcoin's $40,000 Put Option Emerges as Second-Largest Bet Ahead of February Expiry

The $40,000 put option has become one of the most significant positions in Bitcoin's market ahead of the February 27 expiry, highlighting strong demand for downside protection following a significant selloff.

Understanding Options and Their Role

Options are derivatives that give holders the right, but not the obligation, to buy or sell Bitcoin at a predetermined price before expiry. Put options act as insurance against price declines, paying out if BTC falls below a set strike price.

Market Positioning and Key Data

The $40,000 put is now the second-largest strike by open interest, with approximately $490 million in notional value tied to that level. This underscores the appetite for deep tail-risk hedges as Bitcoin has declined by up to 50% from its October highs and is currently trading around $66,000.

Data from Deribit, the Dubai-based exchange owned by Coinbase, reveals that roughly $7.3 billion in Bitcoin options notional value is set to expire at the end of the month.

Max Pain and Market Dynamics

Meanwhile, $566 million sits at the $75,000 strike, which also represents the max pain level. Max pain refers to the price at which the greatest number of options expire worthless, minimizing payouts to buyers. With the spot price trading below $75,000, a move higher into expiry could reduce losses for call sellers.

Call vs. Put Ratio and Market Sentiment

Although calls outweigh puts overall (63,547 call contracts versus 45,914 puts), positioning is not purely bullish. The put-to-call ratio of 0.72 indicates that upside bets still dominate, but the concentration of sizable put open interest at lower strikes highlights clear demand for downside insurance.

Traders are maintaining exposure to a potential rebound while simultaneously hedging against the risk of another sharp decline.