The Trump pump isn’t the only catalyst for bitcoin bulls. A decisively pro-crypto US election outcome is being supercharged by the increased accessibility of leveraged ways to bet on bitcoin’s seemingly daily dash to fresh records continuing.
When options on BlackRock’s iShares Bitcoin Trust launched on Tuesday, there was one-way traffic.
About 289,000 calls changed hands compared to roughly 65,000 puts. That’s a put/call ratio of 0.23, compared to 1.2 for the SPDR S&P 500 ETF Trust.
This interest in leveraged exposure to bitcoin upside helped foster upside in bitcoin prices.
“Demand for call options almost certainly helped drive Bitcoin to a record high of about $94,000,” wrote Bloomberg Intelligence analyst James Seyffart.
in its launch day, $IBIT saw roughly 350k options traded. for comparison, BITO (launched 3 years ago) saw 145k. This product is going to be extremely interesting and tradeable. Here's the December options montage and vol by delta in Dec. There were a lot of blocks traded in Jan… pic.twitter.com/cWRhdZj3Zh
— Alpha_Ex_LLC (@Alpha_Ex_LLC) November 19, 2024
That being said, those headline stats for call volumes versus puts might overstate the extent of the bullish positioning. Looking at calls that expire in December with a strike price of $65 as well as the January $60 expiries — which were two of the four most actively traded contracts for this security — a lot of the transactions are taking place on the bid side.
As a reminder, the bid is the highest price a buyer will pay for a security; the ask is the lowest price a seller will accept. When there’s much more activity on the bid than the ask, that’s generally a signal that sellers of that instrument are more motivated than buyers.
Now look at the call options for both of those expiries with a strike price $5 lower, and you’ll see a lot of the activity was taking place on the ask, which implies there are buyers with strong enough demand to cross the spread.
Put those two dynamics together and it looks like there may have been quite a few call spread trades — that is, buying December $60 calls and selling $65s (or purchasing January $55 calls and selling $60s) in order to cheapen the trade and have a more defined risk-reward profile.
We’ll see if Wednesday’s launch of options on the likes of Fidelity Wise Origin Bitcoin Fund, Bitwise Bitcoin ETF, and the ARK 21Shares Bitcoin ETF shows a similar trend and provides a fresh outlet for the speculative fervor.
