Highest of $64,900 on the 14th. April was followed by a staggering 27% correction that saw BTC drop to the $46,000 level.
This negative move wiped out over $9 billion in BTC futures in a quick action that was previously unthinkable for most investors.
Despite bitcoin’s $5,800 rise in the past 48 hours, options markets failed to surprise the bears, as the two sides would meet at expiration on the 30th. April is almost balanced.
Bitcoin (BTC) USD price on Coinbase. Source: TradingView
Total open interest in bitcoin futures stood at $11 billion three months earlier, although that record was set on the 13th. April was reached at $27.7 billion. Nevertheless, it shows the extent of the recent impact of the price adjustment.
The options markets, on the other hand, operate on a different basis, as the buyer of the contract pays a premium upfront. There is therefore no risk of involuntary liquidation for the owner. While a call option offers the buyer price protection, a put option has the opposite effect.
Therefore, those looking for neutral strategies will rely primarily on put options. On the other hand, call options are more often used by rising traders.
While some exchanges offer weekly option contracts, monthly exchanges generally offer wholesale option contracts. April is no exception, with 72,000 BTC option contracts worth $3.9 billion expiring at a current price of $54,500.
The sum of BTC options opens interest at expiration. Source: Bybt
Note that April options dominate over May or September options. While neutral and UK calls have 41% more open interest on the 30th. April dominate, a more detailed analysis is needed to interpret these data.
It should be noted that not all options will be traded at the deadline, as some of these offers seem unreasonable now, especially with less than two days to go.
Ultra-fast options are now worthless
To understand how these competing forces are balanced, compare the size of calls and puts at each strike price.
April 30: BTC aggregate options open. Source: Bybt
While these calls of $80,000 to $120,000 may seem excessive, they are often used for calendar spread strategies. As Cointelegraph explained, a buyer can even make a profit if BTC trades well below these numbers.
Ultra-fast options are now worthless, as there is no benefit to them after 30 years. April for the right to buy BTC for $80,000. The same goes for neutral puts at $48,000 and below.
Therefore, it is best to evaluate the traders’ position by excluding these unrealistic strikes.
US$54,500 represents a break-even situation.
Neutral calls to $58,000 total 9,950 BTC contracts. They represent $540 million in open interest at the current bitcoin price, with another 3,100 entering the scene with a $60,000 option. The option would have a life of $780 million or more.
On the other hand, more bearish put options up to $51,000 for a total of 12,000 BTC contracts with a current value of $650 million in open interest.
If the price of bitcoin drops below $50,000, another 3,850 put options will be exercised. This figure represents a potential open interest of $700 million for the more bearish options.
Right now, the calls and offers seem to be about the same. Since the $100-150 million difference is unlikely to be enough for either party to put pressure on the price, the monthly duration of the action may not be consistent.
Futures and options on Deribit, OKEx and Bit.com expire on 30 April at 8:00 GMT. CME futures and options are held at 15:00 UTC.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.
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