The recent decline in the crypto market has seen the once-favored $120,000 bitcoin (BTC) options bet overtaken by the $100,000 bet, indicating that traders are reevaluating their optimistic forecasts.
As of now, the $100,000 call option has become the most sought-after BTC options contract on the exchange, featuring a notional open interest of $1.55 billion. This notional open interest reflects the total dollar value of the number of active option contracts at any given time.
The previous front-runner, the $120,000 call option, has now fallen to second place with a notional open interest of $1.33 billion.
A call option grants the buyer the right, but not the obligation, to acquire the underlying asset at a set price on a future date. A buyer of a call option generally carries a bullish outlook on the market. Therefore, a substantial buildup of open interest in higher strike out-of-the-money calls like $100,000 and $120,000 reflects strong bullish sentiment.
The move down to the $100,000 strike seems to indicate that traders are choosing a more cautious approach following the recent crash below $80,000. This shift might suggest a broader reevaluation of bullish sentiment.
Currently, the 25-delta risk reversals, which gauge the disparity between implied volatility (demand) for higher strike calls in comparison to lower strike puts, are demonstrating negative readings, reflecting a bias towards protective put options leading up to the May expiry. This indicates concerns about a prolonged price downturn in the market.
The pricing still supports a bullish outlook for call options beyond May. Furthermore, the total dollar value of all calls currently stands above $16 billion, almost double the $8.35 billion in put options.
