Bitcoin traders can now bet on a possible rise in price to $ 100,000 through Deribit’s new option contract exchange crypto derivatives.
Call and enter options for the $ 100,000 strike price ending September 24, 2021, he went live on Deribit Thursday.
“There have been a few trades, so far 45 [call option] contracts have been traded, ”Luuk Strijers, Deribit’s chief commercial officer, told CoinDesk.
At press time, the $ 100,000 call option holds a cumulative 29.4 contract interest. Open interest refers to the number of contracts traded but not extinguished through offsetting positions. The $ 100,000 giving option has not yet registered any activity.
Options are derivative contracts that give the buyer the right, but not the obligation, to buy or sell the underlying asset at a predetermined price on or before a certain date. A call option represents the right to buy, and the put option gives the right to sell. On Deribit, one option contract represents the right to buy or sell one bitcoin.
Theoretically, buying a $ 100,000 call is a bet that bitcoin will rise above that level on or before September 24, 2021, making the option “in the money”. Traders, who expect prices to more than quadruple over the next three quarters from the current price of $ 23,200, can express their bullish views through the $ 100,000 call.
Right now, that call option, as traders say, is deep outside the money (that is, the spot price is well below the strike price) and trades at a relatively low price of 0.0475 BTC ($ 1,090 press time). By comparison, the $ 24,000 call is trading at 0.2870 BTC ($ 6,588).
Traders often buy deep calls outside the currency during strong bull runs. That’s because they are relatively cheap and gain significant value in the midst of an ongoing rally in the spot market, helping buyers make big money on small investments.
Deribit’s decision to launch options in the $ 100,000 strike comes as a result of bitcoin’s move into the uncharted territory well above $ 20,000. The cryptocurrency quickly rose through $ 21,000 and $ 22,000 to set a record high of $ 23,770 on Thursday. The crypto asset is changing hands near $ 23,100 at press time, according to CoinDesk 20 data.
The decision to launch options for the $ 100,000 strike that ended in September 2021 was based on market demand and in line with Deribit policies, Strijers said.