A Bitcoin option futures contract worth 1.5 billion dollars expired on July 30th, US time, on Deribit, a cryptocurrency derivatives exchange. Since Bitcoin’s price rebounded by 10% in the past month, long traders will benefit and gain considerable spreads.
Those who bet $40,000 in Bitcoin on call may also make their first profit since May 21.
The Bitcoin option contract provides traders with the ability to purchase Bitcoin options. A contract of this type can be traded throughout the month and up until the last Friday of the month. As a result, contract buyers can wait until the last minute to observe price fluctuations.
However, traders can also sell or execute options at any time. If these two actions are not taken, the option will expire automatically.
According to Deribit’s data, the price of the “maximum pain” during this period was $35,000. A price level at which a trader is most likely to reap little reward is considered the “maximum pain.”. At such a price, it would be better to buy bitcoin directly rather than waste money on the option to buy bitcoin.
According to Data from Nomics, an encrypted data service provider, Bitcoin is currently trading at 39,700 dollars, up from $35,000 one month ago. Therefore, many traders who bought the options when Bitcoin dropped will receive the spread when the market rises.
For example, they will execute the option on July 30 at a price of $35,000 to buy bitcoin instead of $39,000, and these purchases may push up the price of bitcoin.
Furthermore, the “put/call ratio” used to measure investor sentiment is 0.86, which represents a mild bearish, which gives Bitcoin bulls a chance to clear up.
In short, if the buyer is willing, the bullish option is a contract to trade Bitcoin at a specific price. Put options are the opposite, the option that allows people to sell Bitcoin at a specific price. When people buy more options, it means that investors expect the price of Bitcoin to rise. When they buy more puts, it represents investors looking for a way to make a lot of money in the event of a price collapse.
Although 21% of the “call/put ratio” tends to be neutral and bullish, a large part of these bets are bets that the price of Bitcoin will rise above 45,000 US dollars, and there are less than a dozen left before maturity. Hours, these options are almost worthless.
In addition, in terms of monthly maturity, the short side is also overconfident, 87% of the neutral short-selling rights are betting that the price will fall below $39,000. If the short side can push the price below this level on July 30, a total of $ 105 million in puts will be profitable.
Bitcoin’s recent gains are mainly driven by market speculation that Amazon will accept crypto or currency payments . Although Amazon denies this rumor, Bitcoin is still fairly stable.
