The derivatives market for Bitcoin, currently priced at BTC$87,439.33, is indicating a phase of stability rather than extreme price fluctuations or drastic downturns.
Recent activity in options listed on Deribit shows significant support around the $85,000 mark due to substantial put selling. This means traders are essentially providing insurance against potential declines below this threshold.
Simultaneously, some market participants are hedging against upward movements beyond the $95,000 to $100,000 range by writing call options at these levels. This behavior establishes a resistance level according to data from market maker Wintermute.
This dynamic suggests that volatility may remain confined within this range as both put and call sellers accumulate premiums from their transactions.
“There’s robust support through put selling around the $85k mark (with additional buffers at $80k and $75k), while call overwrites limit any upside movement near the $95k–$100k area. Volatility is being capitalized on within this band,” stated Jasper De Maere, Desk Strategist at Wintermute in an email communication.
A Solid Foundation Through Put Selling
Put options serve as contracts that yield payouts if the underlying asset dips below a predetermined price before or on a specified date. Thus, traders engaging in selling puts with an $85,000 strike price demonstrate confidence that BTC will not fall beneath this level in the foreseeable future.
A significant volume of traders simultaneously selling puts at a specific strike can often create self-reinforcing support for that price point.
In terms of Bitcoin’s current scenario, the put option with an $85,000 strike stands out as one of the most sought-after choices across all expiration dates; it boasts over $2 billion in notional open interest presently. Notional open interest refers to the total dollar value tied up in active contracts during any given period—on Deribit specifically; one contract equates to one BTC.
If prices approach this level closely enough, it’s probable that those who sold puts might opt to purchase BTC either on spot or futures markets—thereby reinforcing support levels further.
Resistance Created by Call Overwriting
On another note concerning higher valuations for Bitcoin holders: many are opting to sell call options against their long positions when prices hover between approximately $95K and $100K. These “overwrites” allow them to earn income via premiums received while also obligating them to deliver Bitcoin should prices exceed these thresholds significantly enough.
This scenario could lead these sellers adding downward pressure onto spot markets if values approach close proximity towards reaching or exceeding 100K—a factor complicating potential breakout scenarios further downline.
The rising interest surrounding sales of calls with a strike price set at 100K indicates limited excitement regarding rapid ascents into six-figure territory; indeed—as noted—the 100K calls currently represent top-tier popularity boasting over two billion dollars’ worth ($2.37B) noted under open interests.
The Strategy Behind Volatility Harvesting
“Volatility harvesting” has become apparent,” remarked De Maere regarding trades executing both sides (puts & calls) simply pocketing premiums collected along way forward . Essentially ,this strategy aims generating yields predicated upon diminishing volatility —thus coining its name “volatility harvesting.”
These particular types/options gradually depreciate losing value eventually expiring worthless provided bitcoin maintains sideways trading patterns allowing sellers retain full premium amounts acquired throughout transactions.
As per latest updates ,BTC was exchanging hands around$87 ,400 based CoinDesk analytics data .