Bitcoin Options Insights: Calls in the Green — Major Expiry Due Tomorrow
Analyzing Bitcoin's Options Market | Credit: Derek Fenech
Key Takeaways
- More than $3.3 billion combined Bitcoin (BTC) calls and puts expire tomorrow.
- Most Bitcoin calls are profitable, while puts are at a significant loss.
- Is the Bitcoin price increase driven by the derivatives or the spot market?
The Bitcoin price broke out above $75,000 for the first time on Nov. 5 and has not looked back since.
The BTC price reached a new all-time high of $93,625 on Nov. 13. During this rally, there have been no notable pullbacks.
A substantial number of Bitcoin options will expire tomorrow. Given this, it is worth analyzing the options and futures data to see how this may affect the Bitcoin price and determine the extent of the derivative’s market influence on the ongoing Bitcoin rally.
Calls in Profit
Bitcoin options data from Deribit show they lean slightly toward puts rather than calls, creating a 0.58 put/call ratio. However, despite the higher number of puts, the open interest on calls is nearly twice as large.
Going by $1,000 increments, the strike price of $60,000 has the most puts, followed by $70,000, $50,000, and $46,000.
On the other hand, the three strike prices with the biggest number of calls are $80,000, $90,000, and $100,000, respectively.
So, a significant portion of these calls is in the money, meaning their holders will profit if they exercise them.
Going by their time value, $1.9 billion in calls will expire tomorrow, on Nov. 14, 86% of which are in profit. On the other hand, 98% of the puts that expire on the same date are out of the money.
Nov. 29 and Dec. 27 also contain many expiries, especially calls. On Dec. 27, only half of the calls expiring are in the money, meaning that this expiry date likely contains some calls in the $100,000 region and above.
This could cause selling pressure since holders who exercise the option and buy BTC at a discount could immediately sell it to realize their profits.
Most puts that expire on these dates are at a loss. So, an analysis of puts and calls shows that call holders are in profit when looking at the market as a whole and the options that expire tomorrow.
Futures Market has Reset
The data from the futures market shows that the futures funding rate has reset to 0.013%. The funding rate (green) reached 0.059% on Nov. 11 and 13.
It led to a BTC price increase for the first time while the funding rate decreased. This happened because long positions took profit or traders started shorting the rally.
The second time triggered a flush, possibly liquidating long trades with a short-term decline. In any case, the rest of the funding rate is a positive development for the Bitcoin price, meaning that the spot market is driving the rally despite an increase in open interest.
Healthy Bitcoin Increase
An analysis of Bitcoin options shows that the volume of calls is higher while there are more puts than calls. Most calls are in profit, while puts are at a loss.
The futures funding rate has been reset despite an increase in interest, which could mean that there are roughly equal amounts of longs and shorts, reducing the risk of a flush.
Bitcoin (BTC) Price Crosses $71,000 in a 144-Day High — All-Time High Within Reach
