Options Expiry and Max Pain: How to Read Them and What to Expect from the Market

Options Expiry and Max Pain: How to Read Them and What to Expect from the Market

Before every major expiry, two numbers appear in the news: the volume of expiring options and the max pain point. Many read max pain as a price forecast, and that is the main mistake.

We explain what these numbers actually show and how an arbitrage trader can get through expiry day without unnecessary losses.

What options expiry is

Expiry is the moment when options expire. Contracts that are "in the money" are exercised, the rest expire worthless, and their premium stays with the sellers.

On Deribit, monthly options expire on the last Friday of the month at 08:00 UTC. Quarterly expiries are usually larger than monthly ones.

What max pain is in simple terms

Max pain, or the point of maximum pain, is the price at which total payouts on all expiring options are at their minimum. Put simply, at this level the most options expire without a payout.

How the max pain point is calculated: a hypothetical example

The numbers are hypothetical. Suppose there are open calls with strikes of 78,000 (150 BTC), 80,000 (200 BTC) and 82,000 (300 BTC), as well as puts with strikes of 76,000 (300 BTC), 78,000 (200 BTC) and 80,000 (100 BTC).

Payouts are lowest at a price of $78,000. That is the max pain for this hypothetical board.

What the put/call ratio shows

The put/call ratio divides open interest in puts by open interest in calls. In the hypothetical example above, there are 600 BTC in puts and 650 BTC in calls, and the ratio is about 0.92.

• below one - there are more calls, and the market is broadly positioned for growth
• around one - positions are balanced
• above one - there are more puts, and participants are hedging more actively against a decline

In our view, the ratio is useful as background, not as a signal. Some of the puts are insurance for long positions rather than bets on a decline.

Max pain and the put/call ratio are best read together with the size of the expiry. A small expiry barely affects the market, while a large one, worth billions of dollars, can noticeably liven up trading in the last hours before it.

Why the price is "pulled" toward a strike before expiry

Market makers who sold options hedge them on spot and futures. When many contracts are concentrated at a large strike, their hedging trades can keep the price near it - this is called pinning.

The effect does not always work. From what we see, after expiry the hedges are removed, and the market often breaks out of a narrow range with a sharp move in either direction.

The October 30 expiry: what we know

A fresh reference point is the expiry of monthly bitcoin options on October 30. Contracts worth about $12.3 billion expire, mostly on Deribit.

The max pain point is $79,000, and the put/call ratio is 0.62, meaning there are noticeably more calls. This is not a forecast: by expiry, the price may end up near max pain or far away from it.

How an arbitrage trader should approach expiry day

• basis: on CME and quarterly futures it can shift noticeably around expiry, so basis trades are worth recalculating in advance
• funding: a sharp move after hedges are removed quickly changes the rate on perps
• spreads: in the first minutes after 08:00 UTC the difference between exchanges widens, but order books are thinner too
• margin: keep a buffer on each leg of the trade so that a price spike does not knock out one side
• volume: check order book depth, not just the quote

We believe that on a major expiry day it is wiser not to open new high-leverage trades in the last hour before it. The wider spreads afterward can be more profitable if your capital is already spread across exchanges.

Our tools

In the hour of expiry, gaps between exchanges appear and disappear within minutes, so they are easier to catch when all venues are visible at once. Our arbitrage screener keeps dozens of venues in one window, refreshes quotes every second and shows each gap together with the volume actually behind it. The spread calculator helps you check what survives fees, network costs and slippage at your size. The bot is fully manual. It never connects to your exchange API keys.

To test the tools on a live market, ArbitrageScanner offers one day of free access to the whole ecosystem.

FAQ (Frequently Asked Questions)

1. What is max pain in options?

It is the price at which total payouts on expiring options are at their minimum. At this level, the most contracts expire without a payout.

2. Does max pain come true?

Not necessarily. Max pain shows how positions are distributed, not a forecast: by expiry, the price may end up near it or far away.

3. What does the put/call ratio show?

The ratio of open interest in puts to open interest in calls. Below one means more calls, above one means more puts.

4. What time do options expire on Deribit?

Monthly options on Deribit expire on the last Friday of the month at 08:00 UTC.

5. When is the bitcoin options expiry in October 2026?

October 30. Options worth about $12.3 billion expire, max pain is $79,000, and the put/call ratio is 0.62.

6. How does expiry affect arbitrage?

Around it, spreads between exchanges can widen, the basis can shift and funding can change. You need a margin buffer and a check of order book depth.

Conclusion

Expiry is the moment when options are exercised or expire worthless, and max pain is the price with the lowest payouts on them. It shows how positions are distributed, not a price forecast.

For an arbitrage trader, expiry day is the time to recalculate the basis, watch funding and keep a margin buffer. Wider spreads can be an opportunity if your capital is already spread across exchanges.

IMPORTANT! We are software developers. We do not give recommendations or promises of earnings and we do not advise you to invest your money anywhere. Our software is fully manual, all your money stays under your own control. We show examples of how our clients have earned on arbitrage in the past, but we do not advise repeating those actions one to one. Your earnings depend solely on your own actions and on market factors.