Bitcoin’s Option Market Is Now Skewed Bullish

Bitcoin’s price jumped to fresh 11-month highs on Friday with the options market betting on a sustained bull move.

AccessTimeIconJul 31, 2020 at 7:39 p.m. UTC
Updated Sep 14, 2021 at 9:38 a.m. UTC

Bitcoin’s price jumped to a fresh 11-month high on Friday, with the options market betting on a sustained bull move. 

  • The top cryptocurrency by market cap rose to a high of $11,467 during the U.S. trading hours, surpassing the previous multi-high month high of $11,394 reached on Monday.
  • Bitcoin has rallied 24% in July and looks overbought as per the 14-day Relative Strength Index, a widely tracked technical indicator.
  • Options market data shows sentiment is quite bullish. Options are derivative contracts that give the purchases the right but not the obligation to buy or sell the underlying asset at a predetermined price on or before a specific date. A call option represents the right to buy and the put options gives the buyer the right to sell.
  • The one-, three- and six-month put-call skews, which measure the price of puts relative to that of calls, are negative. This is a sign calls, or bullish bets, are drawing higher value than puts, or bearish bets.
CoinDesk - Unknown

BTC put-call skew

  • Investors appear to be selling more put options and buying call options because the put-call open interest ratio that measures the number of put options (or bearish bets) open against calls (or bullish bets) has risen to a two-month high of 0.63, according to data source Skew.
CoinDesk - Unknown

BTC Put-call open interest ratio

The put-call open interest ratio looks to have risen from 0.50 to 0.63 this week due to greater selling in put options.

With the combination of negative skews and a rising put-call open interest ratio, bitcoin’s latest move above $10,000 looks like it can be sustained.


Read more about

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC