On August 16, 2024, $1.4 billion in crypto options expired. The nominal open interest was predictable. What was not: the concentrated call wall at $68,000–$72,000 for Bitcoin, and a max pain price of $64,000 that sat below the spot range. This is not a market event. It is a market structure trap.
I audit the code, not the charisma. And in this case, the code is the open interest ledger. The data reveals a deliberate asymmetry designed by market makers to extract premium from retail directional bets. The put/call ratio for Bitcoin stood at 0.85—mildly bullish sentiment. Ethereum’s ratio was 0.94—near parity, indicating higher uncertainty. But the real story is in the strike concentrations.
Context: The Routine That Isn’t
Options expiry is a recurring mechanical event. Yet, the market microstructure around each expiry is unique. The max pain price—the strike where the total intrinsic value of all open options is minimized—acts as a gravitational anchor. In theory, market makers, who are net short volatility, have an incentive to pin the spot price near max pain to minimize their payout. In practice, this incentive is real but not absolute.
The August 2024 expiry was notable for the sheer volume of open call interest at $68,000 and $70,000–$72,000 for Bitcoin. For Ethereum, the call wall sat at $1,950 and $2,000. These are not arbitrary levels. They represent a zone where retail buyers accumulated leverage, expecting a breakout. The max pain for Bitcoin was $64,000—a full 6–8% below the call wall. For Ethereum, max pain was $1,900, only 3–5% below the first call concentration.
Core: Order Flow Analysis and the Gamma Trap
Let me walk through the mechanics. When a market maker sells a call option, they are short volatility. To hedge, they buy the underlying asset—this is delta hedging. If the price rises toward the strike, the delta of the option increases, forcing the market maker to buy more of the underlying. This creates a feedback loop known as a gamma squeeze. Conversely, if the price falls, the market maker sells the underlying.
Now, look at the concentration of open calls at $68,000–$72,000. At the time of expiry, Bitcoin was trading near $62,000. The call wall was out-of-the-money. For the market maker, the delta of those calls is low. They have minimal hedging pressure. But if the price rises toward $68,000, the delta accelerates, and the market maker must buy Bitcoin. This is bullish. However, the max pain at $64,000 suggests the market maker’s optimal outcome is a lower price.
The contradiction is resolved by understanding the market maker’s net position. The open interest data shows gross positions, not net. A large call wall could be sold by market makers to retail, or it could be bought by institutions. The put/call ratio of 0.85 suggests more calls than puts, implying net short call positions for market makers. That means they are incentivized to keep the price down to avoid the call wall becoming in-the-money.
But the devil is in the gamma. The call wall at $68,000–$72,000 is a gamma trap for retail. If the price stays below $68,000, those calls expire worthless, and market makers pocket the premium. If the price rallies above $68,000, the gamma squeeze could force market makers to buy, driving the price higher. The max pain at $64,000 is the lower anchor. The market is caught between two forces: the gravitational pull of max pain and the explosive potential of the call wall.
Contrarian: The Smart Money Play
Retail sees max pain and expects a decline. Smart money sees the call wall and understands that the market maker’s hedging is asymmetric. The real risk is not a decline to $64,000, but a sudden spike into the call wall that triggers a squeeze. Why? Because the put/call ratio of 0.85 indicates insufficient hedging for a decline. If the price drops, market makers have already sold puts? No, they are net short calls. A drop reduces their hedging needs, but does not create a vicious cycle. A rise, however, creates a buying feedback loop.
The contrarian angle: the most dangerous position is shorting into the expiry. The retail crowd is short because they believe max pain. The market maker is already short calls. To profit from the decline, they need the price to grind lower. But if the price stabilizes or rallies, the gamma from the call wall will accelerate the buying. The squeeze is the real tail risk.
Furthermore, the data is from August 2024. The event is historical. But the pattern repeats. Every monthly expiry has similar structures. The lesson is not to trade the expiry itself, but to understand the positioning beforehand. The call wall at $68,000–$72,000 was a resistance zone. It did not break before expiry. The price did decline toward $64,000 in the weeks following, but the intra-expiry volatility was a different story.
According to my post-mortem analysis of the event, the price on August 16 was around $62,000. It did not reach max pain. It did not reach the call wall. The market pin was near $62,000. The actual settlement price was close to the spot, not the max pain. This is a common outcome when the market is in a sideways consolidation. The max pain theory is weakest in low-volatility environments.
Takeaway: Actionable Levels for the Next Expiry
The next time you see a max pain price, do not treat it as a target. Treat it as a risk indicator. The real action is at the call walls. Identify the strikes with the highest concentration of open interest. If the spot is below those strikes, the market maker has a ceiling. If the spot is above, the ceiling becomes a floor after expiry.
For Bitcoin, the $68,000–$72,000 zone was a wall. For Ethereum, $1,950–$2,000. If the spot is within 5% of the wall, the gamma risk is high. If the spot is below max pain, the market maker’s incentive to push price down is weaker because the calls are already far out-of-the-money.
Yields are calculated, not guaranteed. The same applies to options expiry trades. The only guaranteed profit is the premium collected by the market maker. Retail should not be the other side of that trade.
Strategy beats speculation every time. The strategy for expiry week: avoid directional bets. Instead, sell options at the wings—the call wall and the put wall—to capture the premium decay. Or, if you must trade, wait for the final hour when the gamma is highest and the pin is most likely.
Volatility is the price of entry. The August 2024 expiry was a textbook example of market structure engineering. The $1.4 billion event was a redistribution of value from retail to market makers. The next one will be as well. The question is: which side of the ledger are you on?