Bitcoin (BTC) fully rebounded from its most recent crash, which saw the price drop to the support level of $ 53,000. That move back to $ 57,500 relieved the bulls from the negative pressure on 3,500 BTC options contracts for May 7th represents USD 200 million in open positions along with a $ 1.1 billion expiration of options.
Today’s rapid rebound may have been fueled in part by news that The New Digital Investment Group (NYDIG), in collaboration with Fidelity National Information Services (FIS), has created a framework for US banks to offer cryptocurrency trading services.
Patrick sells, NYDIG’s head of banking solutions told CNBC Several banks have already signed up for the program.
In addition, a Mastercard survey found that 40% of the 15,500 interviewees intend to use cryptocurrencies for payments in the next 12 months. In addition, it has been reported that 77% of Millennials are interested in learning more about cryptocurrencies.
Whatever the reason for the recent Bitcoin price rally, the bulls are now in a more favorable position for the May 7th options expiration.
The balance in the call and put options is misleading
Buyers of options contracts pay the premium in advance and are therefore not exposed to the risk of forced liquidation. On the other hand, the call option (buy) offers the buyer protection from price increases, and the put option (sell) does the opposite.
This means that traders looking for neutral strategies generally rely on put options. On the other hand, call options are more commonly used for bullish positions.
Analysts could easily rule out Bitcoin phasing out on Friday as the call-and-put ratio is unchanged. This means that the open interest is balanced from neutral to bullish and neutral to bearish options. However, these options expire in less than 38 hours, making calling options of $ 65,000 or more worthless.
Put options – the right to sell Bitcoin for $ 48,000 this Friday – are also worthless right now. To properly interpret the potential impact of the May 7th expiration, analysts need to rule out exercise prices that are well above the current price.
Bulls have a $ 104 million lead over $ 57,000
Call options up to USD 60,000 in total 4,950 contracts (USD 285 million)and if the price of bitcoin reaches $ 64,000 by May 7, others 1,620 contracts increase the open interest of the call options by USD 93 million.
Alternative, Neutral to bearish put options comprise a total of 3,150 contracts up to a price of USD 54,000. These currently have an open interest of $ 181 million and would be increased by 2,800 contracts to $ 50,000. This level would increase the open interest of the put options by $ 161 million.
Although the bulls have a $ 104 million lead before Friday ends, that number would drop sharply at any level below $ 60,000. As can be seen from the graph, most of the call options (1,680 contracts) were opened at this level.
Therefore, Bears have incentives to bring the price below $ 60,000. At least until 8:00 a.m. UTC on May 7th.
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