30s Summary

BlackRock’s recently listed spot bitcoin ETF (IBIT) saw significant trading activity on its first day, reaching a volume of $1.9 billion. A large proportion of this was in $100 call options, indicating a bullish expectation that bitcoin prices will rise sharply. There were over 32,000 contract trades for the $100 strike call option, particularly for the December 12 expiry. These expectations align with those on the Deribit cryptocurrency options exchange, where there is $381 million open interest on the $200,000 strike bitcoin call. In addition, IBIT’s most traded option was the $55 strike call, and call options overall significantly outperformed put options.

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The $100 IBIT call option had a lot of action on day one, suggesting that people expect prices to reach $100 in the next few months. This optimism is matching up with a lot of activity we’re seeing in the $200,000 bitcoin call trading on Deribit.

BlackRock’s spot bitcoin (BTC) ETF had an incredible first day, recording a trading volume of $1.9 billion. The majority of this action was on call options, hinting towards a bullish trend. Some traders are even hoping the ETF price might double to around $100. The ETF, which is listed on Nasdaq, closed Tuesday off at $52.70.

The $100 strike call option had over 32,000 contract trades, as per the info tracked by analytics firm ConvexValue. Most of this happened in the Dec. 12 expiry, which is also the most popular settlement in general, totaling 40% of the total trading volume of 354,000 contracts.

Samneet Chepal, crypto quant researcher, expressed amusement at professionals betting on $100 strikes. This would mean bitcoin prices would have to essentially double as IBIT trades near $50.

The inflow for the $100 IBIT call is in line with activity on the Deribit cryptocurrency options exchange. There’s $381 million in notional open interest sitting on the $200,000 strike bitcoin call. If these buyers are indeed investors and not market makers, they’re likely preparing for the spot price to double.

It’s worth mentioning that the most traded IBIT option on Tuesday was the call at the $55 strike. And, call options were traded four times more than put options overall.

As a quick explanation, a call option lets the holder buy the underlying asset at a pre-set price on or before a particular date. Buying a call suggests confidence in the market and is a way to profit from expected price increases in the underlying asset.

As per Deribit, this shift towards call options in the U.S. and the subsequent “trend trading” by market makers to balance their books could trigger a gamma squeeze and push BTC’s price higher.

Luuk Strijers, Deribit’s chief executive officer, said in an email that U.S. institutions and retail who can’t trade on Deribit, which is the biggest crypto options market, can now get into this space. This could create more open interest around certain price levels, leading to more volatility and gamma squeezes along with Deribit.