Crypto Traders Load Up on Bitcoin Topside Option Plays After Binance's Guilty Plea

We have seen interest in loading up more topside with strong demand for the March 2024 expiry calls, one OTC desk said.

AccessTimeIconNov 22, 2023 at 7:29 a.m. UTC
Updated Nov 28, 2023 at 11:38 p.m. UTC
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Binance chief Changpeng "CZ" Zhao on Tuesday stepped down and pleaded guilty to violating U.S. anti-money laundering laws as part of a $4.3 billion settlement, in what may come across as the most significant blow to the crypto market since the collapse of Sam Bankman-Fried's exchange FTX last year.

But that's certainly different from how traders look at the events.

According to over-the-counter institutional cryptocurrency trading network Paradigm, the options market has increased activity in topside bitcoin call options in the aftermath of the Binance news, a sign of persistent bullish sentiment.

"In the options space, after the initial two-way flow, we have seen interest in loading up more topside with strong demand for the March 2024 expiry [calls]," Patrick Chu, head of institutional sales coverage at Paradigm, told CoinDesk.

Market participants traded the $45,000 BTC March expiry call in large numbers early Wednesday. (Chang)
Market participants traded the $45,000 BTC March expiry call in large numbers early Wednesday. (Chang) (Chang)

Data shared by market analyst Chang shows that early Wednesday, market participants traded 550 contracts of BTC $45,000 strike call option expiring in March 2024 on Deribit. Buyers, expecting a continued price rally in bitcoin in the coming months, paid a cumulative premium of $1.5 million for the bullish bets. On Deribit, one options contract represents one BTC.

A call option is a contract between a buyer and a seller to purchase the underlying asset at a preset price on or before a specific date. A call buyer is implicitly bullish on the market, while a put buyer is bearish.

Call-put skews measure the cost of calls expiring across different maturities relative to puts. (Amberdata).
Call-put skews measure the cost of calls expiring across different maturities relative to puts. (Amberdata). (Amberdata)

Overall, both short-term and long-term calls continue to trade at a premium relative to puts, as evidenced by the positive call-put skews. It's a sign the market doesn't expect a significant fallout from Binance's guilty plea.

The sentiment is that U.S. regulators have cleaned up the industry, setting the stage for approving the first U.S.-based exchange-traded fund that invests in cryptocurrency. The so-called spot-based ETF is expected to bring billions in investor money to the crypto market.

Bitcoin is currently trading above $36,500, according to CoinDesk Indices data, down 2% on-day.

Edited by Sam Reynolds.

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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.


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