Return of Animal Spirits? Bitcoin Traders Lock $20M in the $200K Call Option
Return of Animal Spirits? Bitcoin Traders Lock $20M in the $200K Call Option
Deribit data show activity in the $200,000 strike bitcoin
call, which is nearly three times the cryptocurrency’s going market rate.
Options
open interest has soared to record highs alongside bitcoin’s price rally.
Animal spirits seem to have returned to the
market, spurring a 2021-like interest
in bitcoin (BTC) options that would pay off if the
cryptocurrency’s price tripled in the coming months.
On Friday, the Deribit-listed bitcoin call option at the
$200,000 strike price had a notional open interest of over $20 million. The
strike price is almost three times bitcoin’s going market rate of $67,000.
Of the total tally, $14.6 million is locked in the
$200,000 call expiring on Dec. 27, while the rest is concentrated in June and
September expiry strikes, according to data source Deribit Metrics.
Theoretically, buying the so-called deep out-of-the-money
(OTM) call at the $200,000 strike expiring on Dec. 31 is a bet that the
cryptocurrency will end the year above that level.
Call options give investors the right to buy the
underlying asset at a set price at a later date. A call buyer is implicitly
bullish on the market. The notional open interest refers to the U.S. dollar
value locked in the active options contracts at a given time. On Deribit, the
leading crypto options exchange, one options contract represents one BTC.
The $200,000 strike call was quite popular the last time
bitcoin traded above $60,000 in 2021.
The latest interest in the deep OTM strike is consistent
with the consensus that BTC’s
impending halving-induced supply reduction will
further skew the supply-demand imbalance in favor of the bulls, eventually
pushing prices into six figures.
The supply-demand balance recently grew to 1:10, thanks to Wall Street’s embrace of the U.S.-based spot bitcoin exchange-traded funds. Bitcoin tapped fresh record highs above $69,000 early this week and last changed hands near $67,000, representing a 59.7% year-to-date.
Post a Comment