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Friday, December 3, 2021

Bitcoin Options Traders Betting on a $200,000 Price per Coin

#bitcoin #options #traders #bets


Low risk gambles are common during Bull runs“– Paul Ebeling

Bitcoin options traders are making bets; betting on a rally to a 6-figure price by yr end even as the cryptocurrency continues to struggle following last month’s 35% Fibo retrace.

According to data provided by Laevitas, the dominant cryptocurrency options exchange Deribit saw a total of 425 bitcoin call option contracts, with a strike price of $200,000 and an expiration date of 31 December change hands Thursday. The strike price is about 5X the coin’s current price.

A call option is a derivative contract that gives the purchaser the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date.

Theoretically, buying a call at the $200,000 strike expiring on 31 December is a bet that Bitcoin will end the yr above that mark.

While the trade size is small compared with similar gambles that CoinDesk has covered in the past, the bets are interesting for several reasons. To begin with, the $200,000 call options represent a long-term bet, with an expiration date a full 6 months away.

And because the options are so far out-of-the-money (strike well above the spot market price), they are extremely cheap, currently trading at 0.018 BTC ($698) on Deribit.

Options buyers stand to lose just $698 per lot if the market does not move higher until 31 December. But the option will gain significant value if the Bullish mood returns to the Bitcoin market.

Overall now the options market has a Bearish bias, highlighting persistent fears of a more profound decline. The 1, 3 and 6-month put-call skews are currently returning positive values, indicating that puts (Bearish bets) are fetching higher prices (demand) than calls (Bullish bets)

Have a healthy weekend, Keep the Faith!

Paul Ebeling
Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   

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