Traders bet on $200K year-end Bitcoin, but real odds tell a different story

1 week ago

Key takeaways:

Diagonal and butterfly spreads payment from BTC adjacent $160,000.
$200,000 year-end telephone options connote little than 3% accidental of profit.

Bitcoin (BTC) traders are gearing up for the year-end $8.8 cardinal options expiry, scheduled for Dec. 26 astatine 8:00 americium UTC. More than $1 cardinal successful Bitcoin options would go progressive if the terms surpasses $200,000. But does that awesome that traders are expecting a 72% rally?

Calls dominate, but bears comfy with Bitcoin beneath $120K

Currently, full open interest for telephone (buy) options stands astatine $6.45 billion, portion enactment (sell) options way astatine $2.36 billion. This information indicates a wide vantage for telephone options, though bearish traders look somewhat comfy with Bitcoin remaining beneath $120,000.

Some telephone options person onslaught prices acceptable astatine $170,000 oregon higher and volition expire worthless unless Bitcoin gains 46% from its existent level. In fact, if BTC trades adjacent $116,500 connected Dec. 26, lone $878 cardinal worthy of telephone unfastened involvement volition clasp worth astatine expiry.

Professional traders often usage highly bullish telephone options arsenic portion of strategies that don’t needfully beryllium connected a 70% year-end rally.

One specified strategy, the Call Diagonal Spread, involves buying a $200,000 December telephone and selling a $200,000 telephone with an earlier expiry, typically successful October.

This setup profits astir if BTC exceeds $146,000 by Oct. 31, causing the long-dated telephone to admit portion the short-term telephone expires worthless.

However, BTC prices supra $200,000 tin really wounded this strategy. The maximum imaginable nonaccomplishment is BTC 0.005 (about $585 astatine existent prices), portion the maximum summation is BTC 0.0665 (roughly $7,750).

Another illustration is the “Inverse Call Butterfly,” which consists of buying 1 $140,000 call, selling 2 $160,000 calls, and buying 1 $200,000 call—all with December expiries.

This presumption profits astir if BTC lands adjacent $160,000 connected Dec. 26, netting BTC 0.112 (around $13,050). However, losses statesman to accrue if BTC climbs past $178,500. Even so, the $200,000 telephone helps headdress imaginable losses. In this case, the maximum nonaccomplishment is 0.109 BTC, oregon astir $12,700.

$900M successful Bitcoin enactment options people $50–$80K

A sizable unfastened involvement successful $200,000 telephone options does not needfully mean traders expect Bitcoin to scope that level. In fact, astir $900 cardinal successful enactment options are positioned betwixt $50,000 and $80,000 for the December expiry, showing that bearish bets are besides successful play, adjacent if they transportation little odds.

To exemplify the marketplace sentiment, the $140,000 telephone is presently priced astir BTC 0.051 (roughly $5,940), implying a 21% probability based connected the Black-Scholes model. Meanwhile, the $200,000 telephone trades astatine BTC 0.007 (about $814), reflecting an implied probability beneath 3%.

These assertive onslaught prices whitethorn drawback headlines, but the information tells a antithetic story. Traders are not betting the workplace connected a 72% rally. Instead, they are utilizing far-out-of-the-money calls arsenic tools wrong structured strategies that connection constricted hazard and leveraged upside.

Unlike Bitcoin options, however, the likelihood of BTC terms reaching $200,000 this twelvemonth is higher astatine 13%, according to Polymarket.

This nonfiction is for wide accusation purposes and is not intended to beryllium and should not beryllium taken arsenic ineligible oregon concern advice. The views, thoughts, and opinions expressed present are the author’s unsocial and bash not needfully bespeak oregon correspond the views and opinions of Cointelegraph.

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