The first major derivatives settlement of 2026 occurred on January 2, when more than $2.2 billion in Bitcoin and Ethereum options expired, leaving a clear imprint on early-year positioning. The expiry finished with both spot prices above their “max pain” levels, reinforcing a near-term bullish narrative into the opening sessions of the year.
Traders and market-making desks now face the immediate task of unwinding dynamic hedges built around those expiries, a process that can influence liquidity and volatility as the market transitions into Q1. Post-expiry hedge adjustments can either extend momentum or trigger fast reversals depending on how spot responds once the option-related flows clear.
Expiry Snapshot and Positioning Signals
The combined notional across BTC and ETH expiries was about $2.2 billion. Bitcoin accounted for roughly $1.87 billion, with spot near $88,970 versus max pain around $88,000, while Ethereum represented about $395.7 million with spot near $3,023 versus max pain near $2,950. Positioning skewed toward upside: BTC’s put-to-call ratio was about 0.48 and ETH’s about 0.62, both signaling more call demand than put protection. Block trade composition reinforced that bias, with BTC calls at 36.4% versus puts at 24.9%, and ETH calls comprising 73.7% of volume.
Options flows around the expiry reflected a dominant call tilt rather than defensive hedging. With both BTC and ETH settling above max pain, option sellers avoided the kind of sharp squeeze that can occur when settlement lands far from those reference levels. The outcome matters because it reduces the chance of an abrupt, expiry-driven dislocation while still leaving directional positioning visible in the data. In practical terms, the market entered 2026 with a measurable preference for appreciation exposure.
Hedge Unwinds, Gamma Effects, and What Comes Next
Many option writers manage risk through dynamic hedging, adjusting underlying exposure as deltas shift. The January 2 expiry therefore forced hedge rebalancing, a process that can pull liquidity in either direction depending on whether spot extends the post-expiry move or reverses. If bullish sentiment persists, rebalancing could amplify upside via gamma-linked mechanics; if prices soften, the same unwind process can accelerate selling pressure. The key variable is whether spot follows through once hedges are flattened or rolled.
Market participants also showed interest in longer-dated maturities, with March and June expiries attracting flows. That pattern implies positioning is not purely tactical around the first settlement, but extends into the next quarters as a more durable expression of conviction. Those maturities will act as a cleaner test of whether early-year optimism sustains or fades as new information and liquidity conditions emerge. The forward curve of positioning matters because it can anchor hedging demand beyond short-term catalysts.
A settlement of this size has direct implications for execution functions. Higher hedge turnover increases routing and execution demands for trading desks and market makers, with practical pressure on latency, order handling, and venue-level infrastructure load. While the directional narrative is the headline, the microstructure impact often determines how smoothly markets digest large option events. Execution quality becomes a real differentiator when hedging intensity rises.
Attention now shifts to the March and June expiries as the next checkpoints for positioning. They will test whether the bullish skew observed at the start of 2026 can carry through the first half of the year and translate into sustained momentum for both Bitcoin and Ethereum.
