Bitcoin call options concentrate at strike prices above $50,000 ahead of February end-of-month expiry

Quick Take

Bitcoin call options ahead of February’s end-of-month expiry are concentrating at strike prices above the $50,000 mark, according to Deribit data.
The price of bitcoin fell below the $49,000 mark over the past 24 hours, according to The Block’s Price Page.

Bitcoin call options ahead of February's end-of-month expiry are concentrating at strike prices above the $50,000 mark, even as the price of the world's largest cryptocurrency by market capitalization declined below that threshold on Tuesday amid new inflation data coming out of the U.S.

There is a notable concentration of open bitcoin call options at strike prices of $60,000, $65,000, and $75,000 leading up to the end-of-month expiry on February 23, according to Deribit data.

"The strike price with the second highest open interest is $60,000 and the current day second highest options contract in terms of volume traded is bitcoin call options with a strike price of $75,000 for the June 24 expiry," said Bitfinex Head of Derivatives Jag Kooner.

Kooner added that as the market attempts to move past the crucial $50,000 psychological level, many long-term bullish traders are purchasing these cheap call options with strike prices much higher than current bitcoin prices.

"These strike prices represent significant highs above the previous cycle," he told The Block.

Bitcoin call options ahead of February's end-of-month expiry concentrate at strike prices above the $50,000 mark. Image: Deribit.

The concentration of bitcoin calls at the $60,000 strike price and above suggests that a significant proportion of market participants have a particular interest or expectation that the price of bitcoin will rise above this level ahead of the next end-of-month expiration date.

BTC options market weighted toward longs

According to Kooner, the options market is heavily biased toward the long side. The Bitfinex analyst said that since bitcoin crossed the $48,000 mark, there is now an increasingly large number of call spread positions in the derivatives market.

"The current overall open interest spread is biased towards calls at a 0.47 put-call ratio. The overall market put-call ratio in the past 24 hours is 0.60. A ratio of 0.59 based on options expiring on February 23 extend the current trend," he added.

A put-call options ratio below one indicates that the call volume exceeds the put volume, signifying bullish sentiment in the market. It is assumed that a trader who buys call options is implicitly bullish on the market, while a put buyer is bearish.

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 gives the right to buy, and a put offers the right to sell. It is assumed that a trader who buys put options is implicitly bearish on the market, while a call buyer is bullish.

The largest digital asset by market capitalization was changing hands for $48,720 at 10:09 a.m. ET, according to The Block's Price Page. The GM 30 Index, representing a selection of the top 30 cryptocurrencies, has risen by 0.13% in the past 24 hours.

The price of bitcoin has fallen below the $49,000 mark. Image: The Block.

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