Bitcoin Traders Revisit $200,000 Call Option After Nearly Three Years
Market Sees Revival in Animal Spirits as Bitcoin Options Surge
Bitcoin traders are showing renewed interest in options that would profit if the cryptocurrency’s price triples in the coming months, reminiscent of the fervor seen in 2021. The $200,000 strike price call option listed on Deribit had an open interest exceeding $20 million on Friday, nearly three times bitcoin’s current market rate of $67,000.
Of this total, $14.6 million is tied up in the $200,000 call expiring on Dec. 27, with the remainder concentrated in June and September expiry strikes, according to data from Deribit Metrics. This deep out-of-the-money (OTM) call at the $200,000 strike for Dec. 31 expiration is essentially a bet that bitcoin will close the year above that level.
A call option gives the holder the right to buy the underlying asset at a predetermined price at a future date, indicating a bullish sentiment. The $200,000 strike call saw significant interest the last time bitcoin traded above $60,000 in 2021.
This surge in interest for deep OTM strikes aligns with the belief that bitcoin’s upcoming halving-induced supply reduction will further tip the supply-demand balance in favor of bulls, potentially driving prices into six figures. The current supply-demand ratio stands at 1:10, bolstered by Wall Street’s acceptance of U.S.-based spot bitcoin exchange-traded funds.
Bitcoin recently reached new all-time highs above $69,000, marking a 59.7% year-to-date gain. The CoinDesk 20 Index, a broader market indicator, has also climbed 45%.
The rally has led to increased activity in the options market, with total open interest in bitcoin options on Deribit reaching a record $20.4 billion, surpassing the previous peak of $14.36 billion in October 2021. Similarly, ether (ETH) options open interest has surged to an all-time high of $11.66 billion.
Deep OTM calls are cheaper than those at strikes closer to or below the market rate, making them akin to lottery tickets. While the loss is limited to the premium paid for the option, the potential profit is substantial if the market exceeds the strike price before expiration.
