As a blistering rally in bitcoin continues to snowball, traders are piling into speculative bets that would pay off if the pioneering digital currency climbs above $50,000 a coin, something that hasn’t happened since December 2021.
Data provided to MarketWatch by CCData showed more than 47,489 open call options with a strike price at $50,000 or more. Contracts expiring later this month are the most popular, with traders also buying up contracts that will expire in January and March.
A call option gives the holder the right but not the obligation to buy the underlying asset a set price, known as the strike price, by a certain time. A put option gives the right but not the obligation to sell.
Overall open interest in options contracts tied to bitcoin has surged over the past two weeks, rising by about 50,000 contracts. Many of the call options set to expire in December were already trading deep in the money, meaning the contract could be exercised for a profit.
“Recent data reveals significant trading volumes and open interest for instruments with a $50,000 strike price expiring in January and March,” said Hosam Mahmoud, research analyst at CCData. “Additionally, there has been a notable rise in both open interest and overall volumes for options instruments, reflecting an increased speculative inclination among investors.”
Demand for bearish bets on bitcoin has also increased, pushing the put-call ratio, which measures the number of outstanding put contracts against outstanding calls, to nearly 0.48, up from 0.37 on Nov. 1.
Bitcoin prices were marginally lower on Thursday, according to data from CoinDesk. The price of a coin
BTCUSD,
was down 0.3% at $43.683. Prices remained near their highest level since April, however.
Prices of the cryptocurrency have been climbing on hopes that a spot bitcoin exchange-traded fund could be approved early next year.
The price has also benefited from expectations that the Federal Reserve could slash interest rates early next year, which have fueled a broader speculative rally on Wall Street.
See: Wall Street ‘dash for trash’ is heating up as small-caps, unprofitable tech and other speculative bets rally
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