Ahead of Friday’s expiry, there’s been a notable uptick in outstanding puts compared to calls in the open interest of bitcoin options, hinting at a potentially bearish outlook.
Bitcoin Put Call Options Ratio Pointing to Bearish Market
According to Luuk Strijers, the Chief Commercial Officer at Deribit, the put-call ratio for bitcoin options across all expiries currently sits at 0.44. “Looking specifically at tomorrow’s expiry, the ratio climbs to 0.52, signaling a greater presence of puts versus calls,” Strijers informed The Block. “This indicates a bearish sentiment for this month’s bitcoin options expiry, deviating from the broader trend seen in open contracts.”
Strijers went on to explain that this ratio suggests the market anticipates a short-term downturn for bitcoin, prompting investors to employ puts for hedging purposes. “Nevertheless,” he added, “there’s a prevailing sentiment that the longer-term outlook holds more potential for upside.”
The bearish sentiment extends to Ether options skew as well
Strijers noted that the call-put options skew for the longer-term 30- and 60-day ether options remains slightly negative, but it’s nearing zero.
“This implies that puts are relatively pricier compared to calls, indicating a mildly bearish stance for these extended expiries,” Strijers elaborated.
Options, as derivative contracts, grant traders the right, but not the obligation, to buy or sell the underlying asset at a predetermined price by a specific date. A call option grants the right to buy, while a put option provides the right to sell. Typically, buying put options is seen as a bearish position on the market, whereas purchasing calls reflects a bullish outlook.