Bitcoin investors are excitedly waiting for the year-end option expiration. There is a total open position of $6 billion in Bitcoin options that will expire on December 25. For Bitcoin, which has recently recorded a 33 percent rise from $ 60,130, the lowest level of the year, this rise has increased the interest in call options again.
Imbalance in call and put options
Deribit exchange has a 92 percent market share in December-term Bitcoin options and has an open position of $ 5.5 billion. However, the net value realized on the maturity date is expected to be much lower than this amount. Because the majority of high-volume transactions were made to protect against extreme scenarios or within the framework of neutral strategies.
An important factor that attracted the market’s attention is that the open position in call options targeting $ 115,000 and above reached 1.85 billion dollars. Similarly, the total open position of put options targeting prices below $55,000 is around $1 billion. In other words, positions that are high risk and unlikely to be realised, are on the buyers’ and sellers’ side in almost equal proportions.
The 9 percent higher premium on put options shows that professional investors are cautious about a possible Bitcoin price drop.
According to Deribit data, the spread between call and put options is not as wide as expected. Although the optimism in the call option seems high, the high amounts in the put options reveal that the expectation of sharp fluctuations in the market, both upward and downward, is alive.
What do professional investors expect?
The option skew metric is tracked as an important metric in understanding how professional players in the market view upside and downside price risk. While under normal conditions this indicator fluctuates between -6 and +6, currently put options are traded at a 9 percent premium compared to equivalent call options.
This chart shows that investors perceive a moderate risk of price decline. By contrast, Bitcoin’s climb to $80,000 in recent weeks has not created a major shift in overall market optimism.
On the other hand, the fee is relatively low for investors who want to buy a call option with a target of $120,000. According to Deribit pricing dated May 7, the premium to be paid for the right to buy one full Bitcoin at $120,000 or higher is $2,202.
Simplification in position distribution is possible
All this activity indicates that extreme price targets are becoming popular for both upside and downside scenarios. About half of the open positions consist of low-probability strategies on both sides. Analysts evaluate that we may see a contraction in the volume of speculative transactions, especially towards the end of the year.
As a result, the $1.85 billion call option open interest cannot be explained by Bitcoin investors’ over-optimism alone. Option distributions in the market reveal that the cautious approach continues in the long term.
