Ethereum, Bitcoin Investors Gain Optimism from Bullish Options Data

Options action shows some traders are betting on volatility.

Some crypto traders are paying attention to large options bets that appear to be wagering on an ethereum (ETH) year-end rally and bitcoin (BTC) price increases in January.

On Deribit, the crypto derivatives exchange that accounts for the majority of volume and open interest in the BTC and ETH options market, traders placed bullish bets on bitcoin (BTC) and ethereum (ETH).

According to data shared by Deribit Insights, one large fund has spent $4 million on bullish ETH call options expiring by the end of December with strike prices of $4,200 and $4,400.

According to reports, a single “whale” has spent USD 2 million on BTC call options with a strike price of $55,000 USD that will expire in January.

Call options with strike prices above the current market price of an asset are essentially bets that the price will move above the strike price by the expiry date, triggering a large pay-out. If it does not, the option will instead expire worthless,

Call options with strike prices greater than the current market price of an asset are bets that the price will rise above the strike price before the expiration date, resulting in a substantial payout. If it doesn't, the option will expire worthless and the money spent purchasing it - gone.

Tony Stewart, Deribit's weekly options market updates analyst, described the deals as "verified bullish beta plays," which means traders are betting on more volatility in the underlying spot market.

Stewart also stated that it contrasts “some of the tactically perceived psyops of recent Call buying that were accompanied by an unwinding of Spot,” suggesting that the spot market will have a stronger support from purchasers this time.

The notably optimistic activity in the ethereum options market in particular was identified by Zhu Su, CEO and co-founder of Three Arrows Capital and a contributor to Deribit Insights, on Monday.

“Reasonably sized ETH call buying on Deribit Exchange,” Zhu wrote, linking to an image of substantial call option trades with expiry at the end of the year for 14,000 and 18,500 contracts with strike prices of USD 4,200 and 4,400 respectively.

On December 31, the 14,000 call option contracts with a strike price of $4,200 would enable the buyer to acquire ETH $14,000 for $4,200 if the spot price is greater than that by then.

Although large trades in both bitcoin and ethereum options are bets that the price will rise, options are also utilized by individuals as well as corporations to hedge risk, or in conjunction with more complicated market-neutral techniques.

Consequently, reading options data can be difficult, but it's still useful to see how some of the biggest firms in the sector are positioning themselves ahead of the year's end.

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