Bears and bulls maintain balance in bitcoin options market

Although Bitcoin (BTC) is performing an impressive performance in 2021, investors expecting a record monthly close on the candlestick chart are likely to be disappointed this week.

Bitcoin, which reached $ 64,900 on April 14, immediately fell to $ 46,000 with a 27 percent correction.

This drop resulted in liquidation of the BTC long position, whose total value exceeds $ 9 billion.

Still, Bitcoin has recovered by $ 5,800 in the past 48 hours. The bulls and bears seem to keep the balance in the option market, which is approaching the April 30 due date.

Bitcoin (BTC) price on Coinbase. Source: TradingView

The total open position of the Bitcoin futures market was just $ 11 billion three months ago. Considering that the total open position on April 13 was 27.7 billion dollars, it can be seen how strong the effect of the last correction of 9 billion dollars.

The option market, on the other hand, does not carry a liquidation risk since the contract owner has paid his premium in advance. Call options protect investors against upward price movements, while put options do the opposite.

For this reason, those who are neutral or expect a decline are turning to put options, while those who expect a bullish move are using call options.

Although some exchanges also offer weekly options, the volume of monthly options is often larger. In April, the 72,000 BTC option contract with a value of $ 3.9 billion at the current price of $ 54,500 will expire.

Total open positions of BTC options by expiry date. Source: Bybt

Though put options dominate the April 30 maturity date with 41 percent larger open positions, a more detailed analysis is required to interpret the data.

Note that not every contract will be traded on the day of expiry, as some transaction prices now seem unreasonable.

Options with high expectations have lost their value

To understand the balance between the two sides, it is necessary to compare the sizes of the buy and put options at each transaction price.

Total open positions of BTC options that expired on April 30. Source: Bybt

Since it would not make sense to buy BTC at $ 80k on April 30, call options between $ 80-120k could not remain in value. The same goes for put options below $ 48k.

The number of call options up to $ 58,000 is 9,950 and the value of their open positions is $ 540 million at the current exchange rate. If BTC exceeds $ 60,000 by tomorrow, another 3,100 contracts can be activated and the amount of open positions can reach $ 780 million.

The number of put options up to $ 51,000 is 12,000 and the value of their open positions is $ 650 million. If the price falls below 50 thousand dollars, this number may increase to 3.850 and the open position may reach 700 million dollars.

Currently, call and put options appear balanced as the $ 100-150 million difference will not exert great pressure on the price.

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