Options data show positive signs despite drop in BTC price

Bitcoin (BTC) price has dropped 10 percent in the past 24 hours, testing $ 30,000. The decline to this level, which traders describe as the “key” support level, occurred just two days before the expiry date of this month’s futures and options contracts.

Both the bulls and bears are trading at a similar level today, despite record-breaking $ 4 billion in options contracts due on Friday.

Unlike futures contracts, option contracts fall into two categories. Call options allow buyers to buy Bitcoin at a fixed price on the expiry date. On the other hand, sellers have to sell at the price they set. Call options are often used within neutral arbitrage trading or bullish strategies.

Put options are generally used to protect against negative price fluctuations.

In order to examine the equilibrium in the option market, it is necessary to compare the size of the buy and put options at each expiry price (transaction price). Options markets operate in an all-or-nothing manner, so contracts either have a value or become completely worthless.

Bitcoin Price Index: 1 Bitcoin How Many TL? (BTC TL)

The total volume of option contracts in the last 24 hours. Source: Bybt.com

In the last 24 hours, 51 percent of the option volume was made up of call options waiting to rise. However, some of this number is made up of contracts that give purchase orders over $ 37,000. Considering that there are less than 36 hours to the due date, each of these contracts trades for under $ 50 each.

Excluding overly optimistic trading prices, trades in the last 24 hours added another $ 95 million to the open positions of call options below $ 35,000. On the other hand, put options above $ 27,000 correspond to an open position of $ 90 million.

Transactions in the last 24 hours had a neutral effect on Friday’s maturity date. Nevertheless, the general open position balance other than these transactions should also be examined.

Total open position of option contracts relative to the BTC 29 January trading price. Source: bybt.com

Excluding put options below $ 27k and call options above $ 35k, the likely impact of Friday’s expiry date can be more easily predicted.

Call options up to $ 35,000, expiring on January 29, are worth $ 582 million. On the other hand, the value of put options up to $ 27 thousand was measured as $ 422 million. Therefore, it looks like the $ 160 million difference will result in favor of call options.

The opinions and views expressed herein are those of the author alone and do not reflect the views of Cointelegraph. Every investment involves risk. Do your own research before making a decision.

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