Definition ∞ Options expiry volatility refers to the increased price fluctuations observed in an underlying asset as the expiration date of its options contracts approaches. Traders adjust positions to manage risk or capitalize on expected price movements, leading to heightened market activity. This phenomenon can significantly impact the spot price of cryptocurrencies, especially for widely traded assets with substantial options markets.
Context ∞ Options expiry volatility is a recurring event in mature digital asset markets, frequently influencing short-term price dynamics. The situation often involves complex hedging strategies and speculative plays by institutional and retail traders. A critical future development is the expansion of options markets to a wider array of digital assets and the introduction of more sophisticated derivatives, which will likely amplify the effects of expiry-related volatility on the broader crypto ecosystem.
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