Key Points
- Bitcoin options are indicating a bullish sentiment as per the strike positioning and put-call ratio for March's expiry.
- A significant concentration of call options at a $70,000 strike price is seen for both weekly and monthly expiries on Deribit.
Bitcoin options are demonstrating a positive outlook, as revealed by the strike positioning and put-call ratio for the end of March, according to one market analyst.
The recent surge of Bitcoin to a new record high has resulted in the highest instruments traded by volume being monthly and mid-month expiry call options with a strike price of $70,000, as stated by Jag Kooner, Head of Derivatives at Bitfinex.
Call Options Concentration
This accumulation of call options at the $70,000 strike price is evident for both the end of the week and the end of March expiries on Deribit, the world's largest Bitcoin options platform.
Kooner suggests that the current put-call ratio of Bitcoin options indicates traders are showing a bullish bias. The put-call ratio has remained below 0.6 consistently for the first time in half a year, with the 24-hour put-call ratio displaying an even more positive outlook of 0.47.
Implied Volatility Decreases
The global put-call ratio for Bitcoin options is currently at 0.6. A put-call ratio of less than 1 implies bullish sentiment, indicating more interest in potential upside (calls). Conversely, a put-call ratio greater than 1 usually implies bearish sentiment, indicating more interest in downside protection (puts).
The Bitfinex head of derivatives also highlighted the recent decrease in implied volatility in the options market, indicating lower volatility expectations among traders in the past 24 hours. As a result, the premium for options has dropped across all strike prices, making it cheaper to take on positions. Deribit's implied volatility index for Bitcoin fell to 72% from 77% in the past 24 hours.
A decline in implied volatility values often leads to a decrease in option premiums, as the expectation of a lack of future volatility compared to the past allows for lower risk for options market participants.
Options are derivative contracts that give a trader the right, but not the obligation, to buy or sell the underlying asset at a predetermined price on or before a specific date. A call option provides the right to buy, and a put offers the right to sell. A trader who buys put options is generally bearish on the market, while a call buyer is bullish.
