The crypto market is gearing up for a significant event as we approach Friday, where a staggering 1.217 million Bitcoin (BTC) and Ethereum (ETH) options contracts, collectively valued at $4.8 billion, are set to expire on the prominent crypto options exchange, Deribit. Of this substantial total, approximately 10%, equivalent to 117,000 contracts, are associated with Bitcoin, while the remainder pertains to Ethereum options. On Deribit, each options contract represents one BTC or one ETH. These options serve as derivatives that grant the holder the right to purchase or sell the underlying asset at a predetermined price on a future date. The value of these derivatives hinges on the performance of the top two cryptocurrencies by the end of the week. This impending expiry is closely monitored by both seasoned traders and retail investors due to its potential to influence market dynamics before and after settlement. Quarterly expiries, such as this one, typically carry the most weight in terms of volume and market impact. For instance, last June witnessed expiries amounting to a substantial $5.4 billion, and March recorded $5.2 billion. The current quarter's expiry in 2023 is consistent with these figures. Luuk Strijers, Chief Commercial Officer at Deribit, emphasized, "This September, $3 billion in BTC options and $1.8 billion in ETH options will expire, with the Max Pain level close to current price levels." Max Pain is a critical metric in options trading, representing the price level at which options buyers face the greatest potential losses upon expiration. Traders often speculate that options sellers aim to keep prices near the Max Pain point to maximize losses for buyers, achieved by strategic trading in the spot and futures markets. Another factor contributing to the significance of quarterly settlements is the hedging activities of market makers responsible for providing liquidity in order books. Market makers actively engage in buying and selling the underlying asset as the expiry date approaches to manage their gamma exposure, maintaining a market-neutral position. Gamma exposure pertains to the rate of change of an option's price concerning shifts in the underlying asset's value. When market makers hold a net positive gamma exposure, they engage in "buying low and selling high," stabilizing price fluctuations. Conversely, when their net gamma exposure is negative, they "buy high and sell low," intensifying price movements. Despite the substantial options expiry, Strijers doesn't anticipate a significant increase in market volatility leading up to the event. He noted that the past month has seen stable markets, even as the gamma exposure for September expiries has gradually risen over time. Imran Lakha, the founder of Options Insights, highlighted that ether dealers predominantly maintain long gamma positions in the range of $1,650-$1,700. These levels could act as support as the expiry approaches. Griffin Ardern, a volatility trader at crypto asset management firm Blofin, echoed this sentiment for Bitcoin, noting that a substantial positive gamma surrounds the options expiring on September 29. This is expected to exert a stabilizing effect on the price, potentially leading to a settlement near peak gamma exposure levels, estimated to be between $26,000-$27,000 for BTC and $1,500 or $1,650 for ETH. The crypto market is bracing for a momentous options expiry, with billions of dollars at stake. Traders and investors are closely monitoring the situation, with expectations of price stability prevailing as the event draws nearer.