Bitcoin’s (BTC) Price Rally may have stopped recently, but Bullish conviction certainly has not, as whales continue to bet millions on an expanded market rally.
Recently, such a whale performed a significant bullish option that targeted $ 200,000 at the end of the year. At the same time, the strategy involved the purchase of 3,500 contracts in the derivative noted $ 140,000 December call and short sales (or writing) on 3,500 contracts with $ 200,000 December call.
This complex trade, a bull call spread, resulted in an initial Net Department of $ 23.7 million. As derived insight noted, “Dec 140-200K calls dispersion dominates and buys low 140k IV, funded by higher IV 200k calls.”
The strategy makes maximum profits if BTC settles to or above the higher strike price, $ 200,000 in this case, after the expiry date.
This strategy generates a net debit because the premium paid for the lower strike call option (purchase) exceeds the received premium by selling the higher strike call. The spread provides limited gains for a limited risk that is on the head of $ 200,000, while ensuring that the maximum potential loss is included in the original debit.
Options are derivatives used for speculation or covering against price movements. A call option gives the buyer the right, but not the obligation, to buy the underlying asset at a predetermined price of or before a specified future date. A call buyer is implicit Bullish on the market while a put buyer is bearish.
Bitcoin’s spot price reached a record height of over $ 123,000 on July 14 and has since consolidated in a narrow range between $ 116,000 and $ 120,000.
Record settings activity
BTC’s price rally and growing institutional interest in structured products involving volatility sales has increased the activity in the option market.
On Deribit, which accounts for over 80% of the global option activity, the BTC Options Open Interest or the number of open option contracts 372,490 BTC from writing – just shy for the record height of 377,892 set in June.
Meanwhile, open interest in Ether settings has hit a record high of 2,851,577 ETH, according to data source Amberdata. On dismissal, an option contract represents a BTC or ETH.
