Increasing Number of Calls in Bitcoin Options Open Interest
According to data from the Deribit derivatives exchange, there has been a rise in the number of outstanding calls compared to puts in bitcoin options open interest. This suggests that investors are anticipating an appreciation in the price of the digital asset in the early months of 2024. Deribit Chief Commercial Officer Luuk Strijers states that the declining ratio for longer-dated expiries indicates a longer-term bullish sentiment in the market, with more calls than puts outstanding.
Put-Call Ratio Indicates Bullish Sentiment
A put-call options ratio below one signifies that the call volume exceeds the put volume, indicating bullish sentiment in the market. Today’s put-call ratio on Deribit has fallen to 0.43, according to data from The Block’s Data Dashboard. This analysis aligns with findings from GreeksLive, which also highlights a low put-call ratio and suggests that options traders are betting on a rise focused on January spot ETF approvals.
Crypto Derivatives Activity Increasing
Deribit has experienced heightened activity in November, making it one of the most active months for the platform. This increase in activity is seen across the entire crypto derivatives market. The higher activity levels are attributed to increased implied volatility (DVOL) levels, creating more opportunities and overall market volumes.
As we approach the end of December, there is expected to be a substantial amount of open interest leading up to the end-of-month, quarter, and year options expiry date on December 29. Currently, there is $5.7 billion in bitcoin options notional open interest and $2.7 billion in ether options set to expire at the end of December.
Understanding Options
Options are derivative contracts that provide traders with 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 grants the right to buy, while a put option offers the right to sell. Typically, buying call options indicates a bullish outlook on the market, while purchasing put options suggests a bearish sentiment.
Hot Take: Anticipation of Bitcoin Price Appreciation Drives Options Market Activity
The increasing number of outstanding calls compared to puts in bitcoin options open interest suggests that investors are optimistic about the digital asset’s future price movements. This sentiment aligns with predictions of a rise focused on January spot ETF approvals. As we approach the end of December, heightened activity and substantial open interest are expected in the crypto derivatives market. Overall, this indicates a growing bullish sentiment and anticipation of bitcoin price appreciation among traders and investors.
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