Bitcoin Options: BTC could reach new highs

Takeaways from the conference:

• At a price of $102,000 BTC, 97% (or $8.3billion) of Bitcoin put options will expire without value.

• Bitcoin could reach new heights if short-covering is done above $105,000.

BitcoinBTCOn May 8,, climbed above $101,000 and reached its highest value in three months. BTC gained 4.6% per day, triggering a liquidation of $205 millions in bearish futures. This also eroded nearly all put options. Bitcoin’s all-time price of $109 354, as a result, has been questioned by traders.

This is because 97% have been priced below $101,000, and are likely to expire worthless. Even so, it does not mean all put option traders were betting on Bitcoin’s decline, because some of them may have bought the options and made money from their price increases.

Deribit’s most popular option strategy is the “bull put spread,” It involves the sale of a put while buying a second put with a lower strike, limiting both profit potential and risk. A trader who wants to make money from rising prices could sell $100,000 and buy $95,000.

The cryptocurrency traders’ exaggerated confidence is evident in their leading options strategies, including the Deribit Options Markets. “bull call spread” You can also read about the “bull diagonal spread.” Both cases traders expect that the Bitcoin price at expiry will be higher or equal to their options.

Bullish Bitcoin options can reach $100,000, but shorts will resist.

The bullish strategy will be successful in May and early June if Bitcoin maintains its $100,000 level. options expiriesThe traders are given additional incentive to maintain the upward momentum. It is possible that futures traders (shorts), who are using Bitcoin to make money, will try and prevent the new all-time Bitcoin high.

Related: Coinbase to acquire options trading platform Deribit for $2.9B

Open Interest on the aggregate Bitcoin futures The current short position (sell) demand is $69 billion. For the bears, however, higher prices may force them to exit their short positions. Although this is true, it’s not enough. “short covering” Fully hedged positions are less sensitive to Bitcoin prices.

One could, for example, buy Bitcoin spot positions using margin Or spot ETFs while simultaneously selling BTC Futures. The ‘Theatre of the Month’ is a term used to describe this. “carry trade,” This strategy is delta-neutral, which means that profits are made regardless of fluctuations in the price, since the monthly Bitcoin Futures trades at a higher premium due to the longer settlement periods.

Bitcoin’s futures premium was below 8% over the last three months. This means that the incentive for traders to buy Bitcoin is low. “carry trade” The number of cases has been very limited. It is therefore likely that there will be some kind of “short covering” Bitcoin’s surge above $105,000 will increase the likelihood of reaching a new record in the next few months.

The article does not provide legal advice or investment recommendations and it is intended for informational purposes only. This article is solely for informational purposes. It does not represent or reflect Cointelegraph’s views.