Bitcoin options traders neutral after 28% BTC price dip


Bitcoin (BTC) may have recovered from the low $ 47,000 seen on April 25, but the subsequent 15% rebound was not enough to bring optimism to the BTC options markets. Even at the current level of $ 54,000, the price remains 17% below the all-time high of $ 64,900 reached on April 14th.

The popular Cryptical Fear and Greed Index reached its lowest level in 12 months, indicating that investors are closer to “extreme fear,” which is a complete reversal of the level of “extreme greed” seen on April 18th. This indicator collects data on price volatility, volume change, social media performance, Bitcoin dominance and recent search trends.

As the price of Bitcoin fell and then recovered, the more experienced whales and arbitrary desks behind trading options were far from panicking, but their main risk gauge has just reached a 12-month high. However, despite these “worsening” conditions, these professional traders are neutral both in indirect metrics (option prices) and the so-called proportion (risk exposure).

The adjusted proportion of calls is neutral

Call options give the buyer the right to acquire BTC on a future date for a fixed price, while the seller must honor this privilege. For this right, the buyer pays an advance (surcharge) to the counterparty. Call options are considered neutral to optimistic as they give their buyer the option of high leverage with a slightly upfront investment.

On the other hand, put options provide their buyer with protection against negative price swings. As a result, these are widely used in neutral-to-bearish strategies.

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Deribit BTC open interest before end. Source: Laevitas

As the chart above indicates, both call and put options are balanced, except for Friday’s end. Although this might reflect short-term optimism, a more granular view shows that some ultra-optimistic call options dominate the scene. Therefore, by adjusting it to a more realistic price for the next four days, calls and placements are much more balanced.

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Open interest Deribit BTC on 30 April. Source: Laevitas

Notice how the $ 72,000 – $ 120,000 call options govern the end of April 30th. Therefore, considering exclusively the $ 44,000- $ 68,000, calls represent 48% of the outstanding open interest.

The option price risk indicator is neutral

To correctly interpret how professional traders balance the risks of unexpected market movements, the 25% delta district gives a reliable, immediate “fear and greed” analysis.

This indicator compares similar call (buy) and put (sell) options side by side and will become negative when the neutral-to-bearish put option premium will be higher than similar-risk call options. This situation is usually considered a “fear” scenario.

On the other hand, negative slash translates to a higher cost of counter protection, which is generally interpreted as a “greed” measurement.

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Deribit 90-day BTC options 25% delta slash. Source: Laevitas

For the first time in 2021, the 25% delta bias has flattened after spending most of the time on the “greed”. A similar situation emerged on March 25 after BTC corrected 18% of the $ 61,800 peak 10 days ago.

Overall, the indicators of potential markets are neutral, indicating a mild lack of confidence in the recent $ 47,000 rebound. On the other hand, the same metrics could be interpreted as positive, considering that professional traders have not thrown bearish despite the 28% drop in the past 11 days.

The opinions and opinions expressed herein are only those of the author and does not necessarily reflect the views of Cointelegraph. Every investment and business move involves risk. You have to do your own research when you decide.