The launch of options for BlackRock’s Bitcoin ETF was a success, but how realistic are the “expectations” of traders betting on prices of $176,000? On the first day, the options achieved at least $1.9 billion in trading volume.
First trading action Bitcoin ETF options mainly bullish
On the first day, the Bitcoin ETF options immediately started with a significant imbalance.
288,740 call options were written, compared to 64,790 put options. That gives a ratio of 4.4:1, and indicates that the market is quite bullish on Bitcoin.
But should we adopt this optimism, or are these trading actions a bit more complex than they seem at first glance?
How are the ETF options used?
Options are financial instruments that allow traders to bet on price movements or eliminate risk without purchasing the underlying asset.
According to Marcel Pechman, we should not attach too much value to the options and the prices at which traders bet with them. For example, 9,500 contracts have been traded for options that expire on December 20 and only have value if the price of the BlackRock ETF is $ 100.
A price of $100 for the BlackRock ETF is equivalent to a Bitcoin price of $175,824.
So that seems very bullish, but these contracts only cost $0.15 each. That price indicates that, according to the market, there is a very small chance of a Bitcoin price of $ 175,824 on December 20.
Pechman’s conclusion? Many traders use these cheap options as a kind of lottery tickets. Of course, a lot can happen in one month, but Bitcoin must rise very aggressively to reach that price target.
According to Pechman, there are also some more realistic examples. There is also a call option for a BlackRock ETF price of $65 that expires on January 17.
These cost $2.40 per contract and will become profitable when the Bitcoin price reaches $114,286 on the date mentioned. That should mean an increase of more than 20% for Bitcoin over the next two months, which he believes is a bit more realistic.
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Source: https://newsbit.nl/zetten-bitcoin-etf-optiehandelaren-in-op-een-koers-van-176-000/
