Latest news with #LinChen
Yahoo
10 hours ago
- Business
- Yahoo
Bitcoin's Upcoming $14B Options Expiry Marked by Surge in Put-Call Ratio. What Does It Indicate?
Bitcoin's BTC put-call ratio has jumped ahead of Friday's multi-billion-dollar options expiry on Deribit, but its traditional bearish interpretation may not tell the full story this time. The put-call open interest ratio refers to the ratio of active put contracts to active call contracts at a given time. An increase in the put-call ratio indicates a bias towards put options, offering protection against downside risks, and is interpreted as representing a bearish market sentiment. However, the latest spike is at least partly driven by "cash-secured puts" – a yield-generation and BTC accumulation strategy. The strategy involves selling (writing) put options, a move analogous to selling insurance against price drops in return for a small upfront premium. At the same time, the writer keeps enough cash (in stablecoins) on the sidelines to buy BTC as obligated if the prices decline and the buyer decides to exercise the right to sell BTC at the predetermined higher price. The premium collected by writing the put option represents a yield with the potential for BTC accumulation if the put buyer exercises the option. "The put/call ratio has risen to 0.72 — up from just above 0.5 in 2024— indicating a growing interest in put options, often structured as cash-secured puts," Lin Chen, head of business development - Asia at Deribit, told CoinDesk. On Friday, at 08:00 UTC, a total of 141,271 BTC options contracts, worth over $14 billion, representing more than 40% of the total open interest will expire on Deribit, according to data source Deribit Metrics. Of the total due for settlement, 81,994 contracts are calls, while the rest are put options. On Deribit, one options contract represents one BTC. Chen said that nearly 20% of expiring calls are "in-the-money (in profit)," meaning that a large number of market participants hold calls at strikes that are below BTC's current spot market rate of $106,000. "This suggests call buyers have performed well this cycle, aligning with the persistent inflows into BTC ETFs," Chen noted. Holders of in-the-money (ITM) calls are already profitable and may choose to book profits or hedge their positions as expiry nears, which can add to market volatility. Alternatively, they might roll over (shift) positions to the next expiry. "As this is a major quarterly expiry, we expect heightened volatility around the event," Chen said. Broadly speaking, most of calls are set to expire out-of-the-money or worthless. Notably, the $300 call has the highest open interest, a sign traders likely hoped for an outsized price rally in the first half. The max pain for the expiry is $102,000, a level where option buyers would suffer the most. Latest market flows indicate expectations for back-and-forth trading, with a slight bullish bias as we approach the expiry. According to data tracked by leading crypto market maker Wintermute, the latest flows are skewed neutral, with traders selling straddles —a volatility bearish strategy — and writing calls around $105,000 and shorting puts at $100,000 for the June 27 expiry. "For #BTC options, flows skew neutral with straddle/call selling around 105K and short puts at 100K (27 Jun), pointing to expectations of tight price action into expiry. Selective call buying (108K–112K, Jul/Sep) adds a capped bullish tilt. IV remains elevated," OTC desk at Wintermute, told CoinDesk in an al recuperar los datos Inicia sesión para acceder a tu cartera de valores Error al recuperar los datos Error al recuperar los datos Error al recuperar los datos Error al recuperar los datos
Yahoo
27-05-2025
- Business
- Yahoo
The '$300K Bitcoin Lottery' Grows Even Bigger as Traders Chase Upside – Time to Step Back?
Earlier this month, CoinDesk highlighted the rising demand for the Deribit-listed $300,000 bitcoin BTC call option, noting it as one of the most popular bullish plays for the all-important June quarter expiry. Now, this bet has become the most popular in the impending quarterly expiry, reinforcing its appeal as a "lottery ticket" for traders anticipating a bitcoin price rally above $300,000 by the end of the next month. At press time, the $300,000 call option was the most popular bet in the June 27 expiry, with a notional open interest of over $600 million, up from $484 million three weeks ago, according to data source Deribit. Notional open interest represents the dollar value of the number of active or open contracts at a given time. On Deribit, one options contract represents one BTC. "The June $300K BTC call options have emerged as the strike with the highest open interest [in June expiry], reflecting aggressive speculative positioning by traders anticipating continued upside," Deribit's Asia Business Development Head Lin Chen told CoinDesk. "The combination of record-breaking volumes and concentrated options bets signals elevated market confidence—and the potential for heightened volatility ahead," Chen added. Deribit's notional options open interest hit a record high of $42.5 billion last week. The momentum is mirrored in the platform's newly launched block RFQ (Request for Quote) system, registering a historic record of nearly $1 billion in daily volume. A call option gives the purchaser the right but not the obligation to buy the underlying asset, BTC, at a predefined price on or before a specific date. A call buyer is implicitly bullish on the market. The $300,000 call expiring on June 27 represents a bet that bitcoin's price will rise three times from the present $110,000 to over $300,000 by the end of the first half. The bet sounds outlandish, as the first half will end in roughly four weeks. But that's been the case lately on Deribit, with traders increasingly targeting upside potential through short-term options. That is evidenced by front-end risk reversals, measuring the demand for calls relative to puts over short-term, being pricier than those with longer maturities. The chart by Amberdata shows risk reversals are positive across the board, indicating a bias for bullish call options. However, short-duration calls are pricer than longer-duration ones. Usually, the opposite is the case. The trend indicates a heightened appetite for quick-paced bullish bets among market participants. "The three-day Bitcoin Conference 2025 is all set to start in Las Vegas today, and so people are speculating on what new bullish announcements will be released at the event," Chen explained. The growing demand for short-duration calls could be a contrarian signal suggesting that speculative excess is often seen near market tops, according to Markus Thielen, founder of 10x Research. Thielen said the options market is flashing a warning, with the seven-day calls trading at a 10% premium to puts. "The options market is flashing a warning: Bitcoin's skew, measuring the difference in implied volatility between puts and calls, has dropped to nearly -10%, indicating calls are pricing in significantly more volatility than puts," Thielen said in a note to clients. "This suggests traders are aggressively chasing upside rather than hedging downside risk. In our experience, such extreme skew levels often reflect peak bullish sentiment, a classic contrarian signal," Thielen added.
Yahoo
24-04-2025
- Business
- Yahoo
Bitcoin Traders Eye Long Term BTC Accumulation by Selling Put Options
Would you offer insurance when expecting low odds of a claim being made? Most likely, you would, while pocketing the premium without a second thought. Bitcoin (BTC) traders are doing something similar in the Deribit-listed BTC options market, hinting at bullish price expectations. Recently, an increasing number of traders have been selling (writing) BTC put options, likened to providing insurance against price drops in exchange for a small upfront premium. They are implementing this strategy in a cash-secured manner by holding a corresponding amount in stablecoins, ensuring they can buy BTC if the market declines and the put buyer decides to exercise his right to sell BTC at the predetermined higher price. This strategy enables traders to collect premiums (paid by put buyers) while potentially accumulating bitcoin if the options are exercised. In other words, it's the expression of a long-term bullish sentiment. "There is a notable increase in cash-secured put selling using stablecoins—another sign of a more mature, long-term approach to BTC accumulation and a continued expression of bullish sentiment," Deribit's Asia Business Development Head Lin Chen told CoinDesk. Chen said BTC holders are also selling higher strike call options to collect premiums and generate additional yield on top of their coin stash, which is weighing over Deribit's DVOL index, which measures the 30-day BTC implied volatility. The index has dropped from 63 to 48 since the April 7 panic selling in BTC to $75K, according to data from the charting platform TradingView. "We observe that investors remain long-term bullish on BTC, particularly among crypto-native 'holders' who are willing to hold through market cycles," Chen said. Bitcoin's price has risen to over $92,000 since the early month slide to $75,000, supposedly on the back of haven demand and renewed institutional adoption narrative. The sharp price recovery has seen BTC options risk reversals reset to suggest a bias for call options across time frames, according to data source Amberdata. Over the past two days, traders have specifically snapped up calls at strike $95,000, $100,000 and $135,000 via the over-the-counter tech platform Paradigm. As of writing, the $100,000 strike call was the most popular option play on Deribit, with a notional open interest of over $1.6 billion. Just how important it is to track flows in the options market can be explained by the fact that the cumulative delta in Deribit's BTC options and options tied to the U.S.-listed BlackRock spot bitcoin ETF (IBIT) and its peers was $9 billion as of Wednesday, according to data tracked by Volmex. The data indicates heightened sensitivity of options to changes in BTC's price, suggesting potential for price volatility. Delta, one of the metrics used by sophisticated market participants to manage risk, measures how much the price (premium) of an options contract is likely to change in response to the $1 chance in the price of the underlying asset, in this case, BTC. So, the cumulative delta of $9 billion represents the total sensitivity of all outstanding BTC and bitcoin ETF options to changes in the spot price. As of Wednesday, the total notional value of all outstanding options contracts was $43 billion. Such large data or sensitivity to price swings in the underlying asset means market makers and traders actively engage in hedging strategies to mitigate their risks. Market makers, or those mandated to provide order book liquidity, are known to add to price volatility through their constant effort to maintain a net directional neutral exposure. "Option deltas have increased to record levels as open interest grew and strike deltas shifted significantly. Option market makers are actively hedging this delta exposure, driven by substantial new positions and notable shifts in strike pricing," Volmex noted on X. According to Volmex, crypto-native options traders over Deribit are positioned more bullishly than those trading options tied to IBIT.
