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Take a look at how traders can get a discount if they book their Bitcoin options purchased a month back.
After a strong rally post the Amazon news, Bitcoin (BTC) is once again under pressure as bulls face rejection at $40,000 levels. At press time, Bitcoin is trading 2.96% down at $38,984 with a market cap of $729 billion. Today is a crucial day to watch for as it represents the expiry for the month of July. Over $1.5 billion worth of Bitcoin options is set to expire on the Deribit exchange. With a strong rebound in the BTC price this week, bullish traders can get a considerable discount.
The Bitcoin options contracts give traders the chance of buying BTC at a set price. Traders can trade the BTC options contract through the month’s expiry, which is typically the last Friday of the month. Thus, those buying the options can wait until the last minute to play with the BTC price volatility.
As per Deribit, the max pain price for this expiry is $35,000. Meaning, the Bitcoin price can test a further 10% dip from the current levels. The maxi pain point is the price where traders can realize minimum profits. Thus, it is better to buy Bitcoin at this price instead of liquidating at this price.
Bitcoin Price Recovery Helps Options Traders
Bitcoin has been consolidating for a while around $35,000. Earlier this week, it gave a major breakout all the way up to $40,000. Thus many traders who purchase options after June expiry will get a good discount if they exercise their options now since the market has partially recovered.
They can buy Bitcoin tomorrow at $35,000 and these purchases can further push the price of Bitcoin higher.
This Friday 8 AM UTC, 38.6k $BTC are set to expire on Deribit with a notional value of $1.44 billion.
Max pain price $35,000, Put/Call ratio: 0.86 pic.twitter.com/QBwxExZ8w2
— unfolded. (@cryptounfolded) July 27, 2021
Also, based on the put-call ratio of 0.86 at present, the investor sentiment remains moderately bearish. Basically, call options are contracts allowing buyers to exchange BTC at a certain price. Put options are exactly reverse. They give the person the option to sell at a given price.
So if more buy calls are there in the market, the market is bullish and investors expect the price to go up. In case put calls dominate, investors are looking for a way to cash out. Speaking to Decrypt, Arcane Research analyst Vetle Lunde said that crypto options can significantly move the market. He added:
“We’ve seen Bitcoin rallying with force following all monthly options expiries in 2021, so the market action suggests that large expiries provide a short-term anchor for the price,” he said.
The Bitcoin price recovery has brought cheer to investors recently. hopefully, Bitcoin continues to sustain the momentum breaking past its crucial resistance of $40,000.