Bitcoin (BTC) is fast approaching its worst monthly performance in a decade, but some investors are using this as an opportunity to buy ultra-bullish long-term derivatives. There are currently over $900 million in call (buy) options aiming at $100,000 and higher, but what exactly are those investors seeking?
Options instruments can be used for multiple strategies, which include hedging (protection) and also aiding those betting on specific outcomes. For example, a trader could be expecting a period of lower volatility in the short-term, but at the same time, some significant price oscillation towards the end of 2021.
Most novice traders fail to grasp that an investor might sell an ultra-bullish call (buy) option for September to improve gains on a short-term strategy, therefore not expecting to carry it until the expiry date.
Bitcoin option profit/loss estimate. Source: Deribit Position Builder
The chart above shows the net result of selling a Bitcoin $40,000 July 30 put. If the price remains above that threshold, the