Here’s why Bitcoin price could tap $21K before Friday’s $510M BTC options expiry

2 years ago

Bitcoin (BTC) has been trying to interruption supra the $20,500 absorption for the past 35 days, with the latest failed effort connected Oct. 6. Meanwhile, bears person displayed spot connected 4 antithetic occasions aft BTC tested levels beneath $18,500 during that period.

Investors are inactive unsure whether $18,200 was truly the bottommost due to the fact that the enactment level weakens each clip it is tested. That is wherefore it’s important for bulls to support the momentum during this week’s $510 cardinal options expiry.

The Oct. 21 options expiry is particularly applicable due to the fact that Bitcoin bears tin nett $80 cardinal by suppressing BTC beneath $19,000.

Bears placed their bets astatine $19,000 and lower

The unfastened involvement for the Oct. 21 options expiry is $510 million, but the existent fig volition beryllium little since bears were overly-optimistic. These traders wholly missed the people placing bearish bets astatine $17,500 and little aft BTC dumped beneath $19,000 connected Oct. 13.

The 0.77 call-to-put ratio shows the dominance of the $290 cardinal enactment (sell) unfastened involvement against the $220 cardinal telephone (buy) options. Nevertheless, arsenic Bitcoin stands adjacent $19,000, astir bearish bets volition apt go worthless.

If Bitcoin's terms remains supra $19,000 astatine 8:00 americium UTC connected Oct. 21, lone 4% of these enactment (sell) options volition beryllium available. This quality happens due to the fact that a close to merchantability Bitcoin astatine $18,000 oregon $19,000 is worthless if BTC trades supra that level connected expiry.

Bulls tin inactive flip the array and unafraid a $150 cardinal profit

Below are the 4 astir apt scenarios based connected the existent terms action. The fig of Bitcoin options contracts disposable connected Oct. 21 for telephone (bull) and enactment (bear) instruments varies, depending connected the expiry price. The imbalance favoring each broadside constitutes the theoretical profit:

Between $18,000 and $19,000: 0 calls vs. 4,300 puts. The nett effect favors the enactment (bear) instruments by $80 million.
Between $19,000 and $20,000: 1,500 calls vs. 1,100 puts. The nett effect is balanced betwixt calls and puts.
Between $20,000 and $21,000: 4,300 calls vs. 100 puts. The nett effect favors the telephone (bull) instruments by $85 million.
Between $21,000 and $22,000: 7,200 calls vs. 0 puts. The nett effect favors the telephone (bull) instruments by $150 million.

This crude estimation considers the enactment options utilized successful bearish bets and the telephone options exclusively successful neutral-to-bullish trades. Even so, this oversimplification disregards much analyzable concern strategies.

For example, a trader could person sold a enactment option, efficaciously gaining affirmative vulnerability to Bitcoin supra a circumstantial price, but unfortunately, there's nary casual mode to estimation this effect.

A fewer much dips beneath $19,000 would not beryllium surprising

Bitcoin bears request to propulsion the terms beneath $19,000 to unafraid an $80 cardinal profit. On the different hand, the bulls' best-case script requires a pump supra $21,000 to flip the tables and people a $150 cardinal gain.

Bitcoin bulls had $80 cardinal successful leveraged agelong positions liquidated connected Oct. 12 and Oct. 13, truthful they should person little borderline than is required to thrust the terms higher. Consequently, bears person higher likelihood of pinning BTC beneath $19,000 up of the Oct. 21 play options expiry.

The views and opinions expressed present are solely those of the writer and bash not needfully bespeak the views of Cointelegraph.com. Every concern and trading determination involves risk, you should behaviour your ain probe erstwhile making a decision.

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