Investment

Bitcoin options with a high price of $ 80,000 signal that professional traders are expecting more


Betting on the possibility of calling bitcoins for $ 80,000 for June does not seem outrageous BTC bull performance in the last few weeks. This was not the case a few months ago, when BTC peaked at $ 42,000 on January 8 and then dropped to $ 30,000.

Bitcoin price, USD. Source: TradingView

At the time, on January 26, a price increase of $ 32,000 was needed, which seemed to be quite a hair’s breadth. The June call options of BTC 80,000 were therefore traded on Deribit for $ 2,240, or 0.07 BTC.

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Possibility to call June 80,000 BTC in BTC. Source: Deribit

Less than two months later, when BTC reached $ 61,700 on March 13, the same call option peaked at 0.15 BTC, or $ 9,255. That’s 3x profit in less than seven weeks. Keep in mind that despite a 93% increase to $ 61,700, an additional 30% was needed to reach the $ 80,000 strike.

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June options market for BTC calls. Source: Deribit

Despite the recent increase in BTC prices, the probability of implied options (delta) is currently at 39%. This call option price has also increased due to the change in BTC volatility, as sellers will demand a more substantial risk premium during uncertain markets.

Intense price fluctuations, regardless of direction, will push volatility higher, and unexpected news from major media outlets usually propels the indicator up.

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Bitcoin 60-Day Option Historical Volatility. Source: Buybitcoinworldwide.com

Notice how the volatility of BTC rose from 4% in January to the current 5%. This event is especially bullish for call options buyers. Even if the price of BTC remained the same, the option price would climb accordingly.

The probabilities of the possibilities should not be taken literally

The price of options also strongly depends on how far the expiration date is. The same $ 80,000 call may be considered worthless two days before maturity. Traders should therefore not be too obsessed with the likelihood of implied options (delta).

Right now, the $ 80,000 call option may seem appealing in June due to its 39% delta and the fact that BTC has gained 43% in the last 100 days.

However, traders often consider buying “impossible” call options with longer expiration dates, as those who were brave enough to bet on a 150% increase in BTC prices in January are likely to be extremely pleased with the results.

The views and opinions expressed herein are those of an opinion author and does not necessarily reflect the views of the Cointelegraph. Every investment and business move involves risk. You should do your own research when making your decision.



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