Bitcoin Options Trader neutral after BTC price drop 28%

Bitcoin (BTC) could have rebounded from the low of $ 47,000 on April 25, but the 15% rebound that followed was not enough to add optimism to BTC options markets. Even at the current level of $ 54,000, the price remains 17% below the all-time high of $ 64,900 hit on April 14th.

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

When the price of Bitcoin fell and then rebounded, the more experienced whales and arbitrage desks behind options trading were far from panicking. However, the main indicator of risk recently hit a high of 12 months. Despite these conditions of “Deterioration”, These professional traders are neutral on both bias metrics (option prices) and put-to-call (risk exposure).

The adjusted share of put-to-call options remains neutral

Bitcoin Options Trader neutral after BTC price drop 28%
Bitcoin Options Trader neutral after BTC price drop 28%

Call options give the buyer the right to purchase BTC at a fixed price at a later date, while the seller is required to respect this privilege. For this right, the buyer pays a counter-fee (premium) to the other party. Call options are considered bullish neutral as they offer the buyer the option of high leverage with a small initial investment.

Put options, on the other hand, offer the buyer coverage or protection against negative price fluctuations. As a result, these are widely used in neutral to bearish strategies.

BTC open interest in Deribit until expiration. Source: Laevitas.ch

As the graph above shows, both the call and put options are balanced, with the exception of the expiry on Friday. While this may reflect short-term optimism, a more detailed view reveals that some ultra-bullish calls are dominating the scene. So if you set it to a more realistic price range for the next four days, the call and put options are much more balanced.

BTC Open Interest for Deribit on April 30th. Source: Laevitas.ch

See how call options from $ 72,000 to $ 120,000 dominate the April 30th expiration. Given the exclusive range of USD 44,000 to USD 68,000, the call options therefore account for 48% of the outstanding open positions.

The option price risk indicator is neutral

To properly interpret how professional traders offset the risks of unexpected market movements, The 25% slope of the delta provides an instant and reliable analysis of “fear and greed”.

This indicator compares similar call and put options and becomes negative if the premium of risk-neutral put options is higher than that of call options with a similar risk. This situation is often viewed as a “scary” scenario.

On the other hand, a negative trend leads to higher upward protection costs, which are often interpreted as a measure of “greed”.

25% slope of the delta of the 90-day BTC options Deribit. Source: laevitas.ch

For the first time in 2021, the slope of the delta flattened by 25% after spending most of the time on the “greed” side. A similar situation emerged on March 25 after BTC corrected 18% from the high of $ 61,800 10 days earlier.

Overall, the indicators for the options market are neutral, indicating a slight lack of confidence in the recent $ 47,000 rebound. On the flip side, the same metrics could be interpreted positively, considering that professional traders haven’t turned bearish despite the 28% decline in the past 11 days.

The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph.com. Every investment and every trade involves risk. You must do your own research when making a decision.

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