Bitcoin (BTC) traders are engaging in a strategy similar to offering insurance by selling BTC put options in the Deribit-listed market, reflecting bullish price expectations. This involves selling put options, which act as insurance against price drops, in exchange for a small upfront premium. Traders are doing this in a cash-secured manner by holding stablecoins to ensure they can buy BTC if necessary.
This strategy allows traders to collect premiums and potentially accumulate bitcoin if options are exercised, showcasing a long-term bullish sentiment. "There is a notable increase in cash-secured put selling using stablecoins," said Deribit's Asia Business Development Head Lin Chen.
Additionally, BTC holders are selling higher strike call options to generate more yield, impacting Deribit's DVOL index, which measures the 30-day BTC implied volatility. The index has decreased from 63 to 48 since April 7, following a panic selling event.
Investors are optimistic about BTC's long-term prospects, especially among those willing to hold through market cycles. The recent rise of BTC's price to over $92,000 is attributed to haven demand and renewed institutional interest.
There has been a resurgence in call options, with traders acquiring calls at higher strike prices. The $100,000 strike call is currently the most popular option play on Deribit, with a notable open interest.
The cumulative delta in Deribit's BTC options and options tied to U.S.-listed BlackRock spot bitcoin ETF and peers amounted to $9 billion as of Wednesday, according to Volmex. This figure indicates a heightened sensitivity of options to changes in BTC's price, suggesting potential for volatility.
Delta measures the likelihood of changes in an options contract price relative to fluctuations in the underlying asset. The total notional value of outstanding options contracts reached $43 billion.
Large deltas suggest increased engagement in hedging strategies to mitigate risks. Option market makers actively hedge delta exposure, driven by new positions and notable shifts in strike pricing.
Crypto-native options traders on Deribit are positioning more bullishly than those trading options tied to the IBIT.
This article has been published in coindesk.com via Yahoo News.
