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Market Outlook 24NOV24: Options Activity After Bitcoin's ATH

24 November 2024

Introduction

Bitcoin’s options market has been a hub of activity in recent weeks, with traders positioning themselves strategically around key expiries and strikes. This report analyzes the period from 7th to 23rd November, leveraging tools like the Thales Heatmap and Market Screener alongside data from Deribit Metrics to uncover significant trends.

Our focus centers on the 29th November expiry, which exhibits notable activity across both calls and puts, highlighting shifts in trader sentiment and market dynamics. Additionally, we explore the implications of this activity, including heightened interest in specific strikes and the strategies employed by traders as they hedge or speculate on Bitcoin’s next moves. Finally, we provide insights into how these dynamics reflect broader trends and set the stage for the next key expiry on 27th December.

Background: Market Adaptation Over Time

In our previous research, we highlighted the dynamic nature of the Bitcoin options market, where trader positioning and strike price preferences evolved in response to shifting conditions. Building on that foundation, this report narrows its focus to the recent trading activity from 18th–23rd November, particularly around the 29th November expiry. This period captures how traders adapt their strategies, emphasizing options as a versatile tool for managing risk and capturing opportunities.

Heatmap Overview: Identifying Key Expiries and Strikes

Thales Heatmap provides a bird’s-eye view of Bitcoin options trading for the selected range (7th–23rd November), showcasing activity across expiries and strikes:

Increased Attention to Puts

Data from Deribit Metrics reinforces the heatmap findings, showing that:

Market Dynamics for 29th November

To understand recent trading behavior, we analyzed MarketScreener data filtered for the 29th November expiry from 18th–23rd November:

Through the Lens of Market Screener: A Focused Dive

After analyzing the market from a broader perspective using the heatmap and identifying the most traded expiries and strikes, we now turn to the Thales Market Screener for a deeper, more focused examination. This tool allows us to refine the analysis by selecting specific time frames, strike ranges, expiries, option types, and sides (long or short). By narrowing down the data to the significant expiry (29th November) and strikes ($90,000 to $100,000), we can visualize and analyze the filtered market data.

Long Put

Focusing specifically on the long puts within the $90,000–$100,000 strike range for the 29th November expiry, we observe several key points:

This refined approach allows us to extract deeper insights into the structure and sentiment of the options market, illustrating the strategic positioning of traders hedging or speculating on potential corrections in Bitcoin’s price.

Examining the Call Side: Market Dynamics and Insights

Shifting our focus to the call options for the same time frame (18th–23rd November) and expiry (29th November), we observe the following insights based on the filtered data:

This positioning implies that the market anticipates Bitcoin's price remaining below $100,000 until the expiry on 29th November.

Here it should be reminded that the market is dynamic and needs ongoing analysis and monitoring. In future reports, we will extend our analysis to the next significant expiry—27th December—to provide further insights into market sentiment and trends.

Takeaways

Heightened Put Activity

Traders' increased focus on put options for 29th November suggests potential concerns over a Bitcoin price correction or a desire to hedge against downside risks.

Insights into Strategic Positioning

Through advanced tools like gamma analysis, we identified $91,000 as the weighted average strike price for puts, underscoring how traders align their strategies with evolving market trends.

Call Options and Profitability

Call options for strikes below $100,000 reflect speculative buying, while higher strikes exhibit premium collection. Both approaches have proven profitable during the analyzed timeframe.

Dynamic Market Behavior

The shifts in strike preferences and changes in max pain highlight the flexibility of traders in responding to evolving market conditions.

Future Analysis

While this report focuses on 29th November, we will analyze the 27th December expiry in our next research, shedding light on its emerging significance in the Bitcoin options market.

Disclaimer

This report is for informational purposes only and should not be considered financial or investment advice. The analysis provided reflects market trends and data as of the specified period and may not predict future outcomes. Trading Bitcoin options involves significant risk, and individuals should conduct their own research or consult with a professional advisor before making any financial decisions.