As Bitcoin Regains Lost Ground, Options Traders Bet on $52K Move By Late January

At the press time price of $35,580, bitcoin (BTC, +3.72%) is up nearly 16% from the low of $30,305 observed on Monday. Even so, the number one cryptocurrency by market value is still well short of the weekend highs above $40,000.

Some traders, though, have been buying Jan. 29 expiry call options at the $52,000, $64,000, and $72,000 strike prices on the Deribit exchange.

A call option gives the buyer the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A call option is a bullish bet, while a put option is a bearish bet.

A total of 4,000 contracts have been bought at the $52,000 strike in the past 24 hours, according to data provided by Swiss-based data analytics platform Laevitas. The $64,000 and $72,000 strike call options show buying volume of 3,250 and 2,000, respectively.

Theoretically, the purchase of the $52,000 strike call is a bet that bitcoin would rise above that level on or before Jan. 29, making the option “in-the-money.”

Currently, the three contracts are out-of-the-money (OTM), with the spot price well below these strike prices, and are trading at 0.045 bitcoin, 0.0260 bitcoin, and 0.0190 BTC, respectively.

The deep OTM options are relatively cheap and tend to gain significant value if the price rally materializes, yielding big returns on small investments. As such, seasoned traders with bullish price expectations often buy call options at higher strike prices.

Therefore, the latest call option purchases at the $52,000, $64,000, and $72,000 strikes indicate bullish market sentiment. Other option market indicators are making a similar call.

The one-, three- and six-month put-call skews, which measure the cost of puts relative to calls, remain entrenched into the negative territory. That’s a sign of call options, or bullish bets, drawing higher demand than puts.