Bitcoin [BTC] options for spot ETFs were launched on the 19th of November, leading to a surge in the cryptocurrency’s value, reaching a record high of over $94,000.
Analysis on X (formerly Twitter) hailed the launch as successful, noting a significant 4.4:1 call-to-put ratio.
A total of 288,740 call options exceeded the 64,970 put options, indicating a rise in optimistic sentiment and increased trust in the future of Bitcoin.
James Seyffart, an ETF analyst at Bloomberg, also acknowledged this trend and commented on its significance.
Significance of the Trend
The rise in Bitcoin call options, especially the $100 calls expiring in December, initially indicated a bullish perspective, with some contracts suggesting prices exceeding $170,000.
Nevertheless, valued at merely $0.15 each—equivalent to only 0.3% of IBIT’s $53.40 worth—these options implied a low probability of reaching $175,824.
These low-cost options are often seen as speculative “lottery tickets,” distorting the genuine market sentiment and fostering a deceptive sense of positivity.
For instance, consider the $65 IBIT call option expiring in January, tagged at $2.40—4.5% of IBIT’s $53.40 value. It becomes profitable if Bitcoin surpasses $114,286, a 22% increase in two months.
Alternative Trading Strategies
Alternatively, sophisticated traders might opt for strategies like synthetic longs.
One user, “Ashton Cheekly” on X, proposed a method involving selling a $50 put and acquiring a $60 call for $2.15, mimicking Bitcoin ownership without directly holding the asset.
Another popular tactic is the covered call, where an IBIT investor sells a call option for instant earnings.
For instance, selling a $55 call for $5.20 when IBIT is priced at $53.40 secures the premium but restricts profits if IBIT climbs above $55.
If IBIT closes lower, the investor retains the premium, minimizing losses or enhancing gains.
Considering the current market trends, the speculation-driven $170,000 Bitcoin cost forecast through options appears improbable.
While options provide potential for substantial profits, they also carry the risk of rendering themselves worthless.
Thus, for individual investors, Bitcoin ETFs and options present fresh avenues for profit, emphasizing the essence of comprehending the associated risks and mechanisms for successful trading.