Bitcoin Options Expiry and Its Implications for Near-Term Price Volatility

Bitcoin's price action in late December 2025 has been tightly constrained within an $85,000–$90,000 range, a dynamic shaped by heavy derivatives positioning and dealer hedging strategies. As the December 26 expiry looms, the market faces a critical juncture: will the $27 billion in Bitcoin options set for expiration stabilize this range or catalyze a breakout? To answer this, we must dissect the interplay of open interest (OI) distribution, max pain levels, and dealer behavior.

Open Interest Distribution: A Bullish Imbalance

The Bitcoin options market is heavily skewed toward bullish positioning, particularly at the $100,000 strike price. Data from Deribit, which accounts for $46.24 billion of the $55.76 billion total OI, reveals a "price shelf" forming above $100,000, where gamma exposure and dealer hedging obligations are most intense. This concentration of call options suggests traders are betting on a sustained move beyond $100,000, a psychological barrier that Bitcoin recently pierced but has yet to consolidate above. Meanwhile, the $90,000 strike remains a focal point for hedging activity, with large put gamma reinforcing a short-term floor near $85,000.

Put/Call Ratios and Market Sentiment

The put-call ratio for December 2025 options stands at 0.38, indicating a strong call bias. This imbalance reflects widespread optimism that Bitcoin will resolve above $100,000, potentially triggering a feedback loop of dealer buying as hedging demands intensify. However, this bullish positioning also creates a risk: if the price fails to break through $94,000–$96,000 resistance levels, the concentrated OI at $100,000 could exacerbate volatility as dealers unwind positions according to analysis.

Max Pain and Dealer Profits

Max pain analysis, which identifies the price level where the most options expire worthless, points to a critical threshold. Calculations suggest max pain at $95,000–$96,000, a range where dealers are likely to profit maximally from expiring contracts. This dynamic implies a mechanical bias for Bitcoin to gravitate toward these levels as expiry approaches, with dealers potentially intervening to suppress rallies above $96,000 or prop up dips below $90,000 as market participants note.

Dealer Hedging and Range Constraints

Dealers are employing mechanical hedging strategies to keep Bitcoin within a defined range, a tactic that has historically reinforced consolidation in December. For instance, large put gamma near $85,000 forces dealers to buy dips, while heavy call gamma near $90,000 compels them to sell into strength according to market analysis. These actions create a self-fulfilling prophecy: the more OI concentrated at $100,000, the stronger the upward pressure as dealers hedge their exposure by purchasing spot Bitcoin as reported.

Pin Risk and Expiry Implications

The risk of "pin risk"-a sudden price spike or drop near a strike price-looms large. With $27 billion in options expiring on December 26, the market is primed for volatility. If Bitcoin closes near $90,000 or $100,000, the concentrated OI at these levels could trigger sharp price swings as dealers adjust hedges or liquidate positions according to market data. However, a resolution toward the max pain level of $95,000–$96,000 might stabilize the range by aligning dealer incentives with price containment.

Conclusion: Stabilization or Breakout?

The December 2025 expiry is a double-edged sword. On one hand, the mechanical bias of max pain and dealer hedging could reinforce the $85,000–$90,000 range, at least temporarily. On the other, the $55.76 billion in concentrated OI-particularly the $46.24 billion on Deribit-poses a destabilizing risk if Bitcoin breaks above $100,000. The latter scenario would trigger a surge in dealer spot purchases, potentially propelling BTC toward $116,000. Investors must monitor the interplay of these forces, as the expiry could either cement consolidation or catalyze a new bull phase.