Why Bitcoin options at $80K indicate that skilled traders anticipate further gains.

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The recent market action of Bitcoin, as well as the growing rate of institutional acceptance, mean that traders who bet on the June $80,000 Bitcoin call option will be richly compensated.

Given BTC’s recent bullish results, betting on $80,000 Bitcoin call options for June doesn’t seem outlandish. This was not the case a few months earlier, when BTC peaked at $42,000 on Jan. 8 and then fell to the $30,000 mark.

Bitcoin price, USD. Source: TradingView

At the moment, a 150 percent increase from the $32,000 price on Jan. 26 appeared very unlikely. As a result, the June $80,000 BTC call (buy) options on Deribit sold for $2,240, or 0.07 BTC.

BTC $80,000 June call option, in BTC. Source: Deribit

Less than two months later, on March 13, when BTC hit $61,700, the same call choice peaked at BTC 0.15, or $9,255. That’s a threefold increase in less than seven weeks. Bear in mind that, after the 93 percent raise to $61,700, a further 30 percent increase was needed to meet the $80,000 strike.

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BTC June call option market. Source: Deribit

Despite the recent rise in the price of Bitcoin, the implied options likelihood (delta) is currently at 39%. The call option price has also risen as a result of the shift in BTC volatility, as sellers would demand a higher premium for taking the risk in volatile markets.

Intense price fluctuations, regardless of direction, will increase uncertainty, and sudden coverage from major media sources will typically drive the measure higher.

 

Bitcoin 60-day options historical volatility. Source: Buybitcoinworldwide.com

Take note of how Bitcoin uncertainty rose from 4% in January to 5% today. This is a rather bullish case for call option buyers. And if the BTC price had been constant, the option price would have risen in lockstep.

Options probabilities should not be taken literally

The price of options is also highly influenced by how far away the expiry date is. The same $80,000 call could be declared useless two days before maturity. As a result, traders should avoid obsessing about inferred option likelihood (delta).

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The $80,000 June call option may seem far-fetched right now due to its 39 percent delta and the fact that BTC has gained 43 percent in the last 100 days.

Nonetheless, traders often think trading ‘impossible’ call options with longer expiry terms, since those who were bold enough to gamble on the 150 percent BTC price spike to $32,000 in January are likely to be incredibly rich.

satisfied with the results.

noshitcoins

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