Key takeaways:
Bearish options strategies maintain an edge unless Bitcoin secures a decisive price breakout above 90,000.
Traders are using $100,000 call (buy) options as income tools rather than direct bets on a massive Bitcoin rally.
Bitcoin (BTC) has rebounded multiple times from the $87,000 level over the past two months, but traders remain skeptical about a decisive breakout above $95,000. Friday’s upcoming $10.8 billion BTC options expiry represents a pivotal moment for bulls, especially as call (buy) options dominate overall market interest.
The aggregate $6.6 billion in call options open interest sits 57% higher than the $4.2 billion in put (sell) instruments; however, this does not necessarily mean bulls are in control. As usual, Deribit maintains a comfortable lead over its competitors with a 78.7% market share, followed by OKX at 6.3%. The Chicago Mercantile Exchange (CME) holds third place with a 5% share.
Less than 17% of the Jan. 30 call options interest at Deribit is positioned below $92,500. Furthermore, given that Bitcoin’s lowest price in two months was $84,000, it is likely that call options at $70,000 and lower are being utilized for complex onchain strategies rather than direct bets on price appreciation. Purchasing a call option 20% below current market levels is prohibitively expensive for most retail traders.
For example, a $70,000 BTC call option for Feb. 27 currently trades at 0.212 BTC, which is significantly higher than an $80,000 call option at 0.109 BTC. This price gap explains why bulls typically prefer options near or slightly above the spot price level. Conversely, BTC call options at $110,000 or higher are often disregarded, as their cost is lower than 0.002 BTC (roughly $180).
Bearish Bitcoin options strategies favored below $90,000
A significant portion of the $100,000 and higher call options can be attributed to covered call strategies. In this setup, the seller receives an upfront premium, similar to earning interest on a bond. This differs from standard fixed-income products because the seller retains the underlying Bitcoin, even though their potential profit is capped. Consequently, these are rarely viewed as purely bullish indicators.
Call options at Deribit between $75,000 and $92,000 total $850 million. To determine if bulls are better positioned for Friday’s expiry, one must compare how put options are stacked and estimate if they are being used for downside protection or neutral strategies. A primary indicator is the volume of put options below $70,000, where the cost is less than $300.
Despite being less represented than call options, put instruments between $86,000 and $100,000 amount to $1.2 billion at Deribit. Therefore, even if we assume that puts at $102,000 and higher do not benefit from a price dip, bearish strategies appear better positioned for the January expiry.
Related: Bitcoin’s real ‘Uptober’ moment might start in February–Here’s why
Below are three probable outcomes for Friday’s BTC options expiry at Deribit based on current price trends:
Between $86,000 and $88,000: The net result favors the put (sell) instruments by $775 million.
Between $88,001 and $90,000: The net result favors the put (sell) instruments by $325 million.
Between $90,001 and $92,000: The net result favors the call (buy) instruments by $220 million.
As long as the Bitcoin price remains below the $90,000 mark, the mathematical advantage continues to favor bearish options strategies.
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