Analyzing open interest distributions across different strike prices provides important insight into market sentiment and potential price trajectories. Strike prices represent the specific level of exercise of options agreements. Basically, the prices that traders can buy and sell Bitcoin If they act on a contract. It is essential to understand the concentration of open interest at these strike prices, as it reveals where traders protect against bets or losses.
The best OIs for call options focus on significantly higher strike prices, particularly $120,000 (9,496.2 contracts), $100,000 (8,362.8) and $110,000 (7,213.3), with a notable OI extending to $150,000 (6,266.7). These strikes are well above the current Bitcoin price of $81,220. This distribution shows strong bullish sentiment, with many traders betting on a significant price rise by the end of the month.
The PUT option has the highest OI of $80,000 (4,542.4 contract), followed by $75,000 (4,459.9), $70,000 (4,003.8), with an additional OI of $85,000 and $95,000. These strikes are close to or below current price levels, suggesting that some traders are hedging or speculating on a decline against potential price drops. Approximately $80,000, close to the current price, reflects the attention that Bitcoin will fall below this level.
Cole’s OI is well beyond puts at top strike prices. For example, the best call OI ($120,000: 9,496.2) is more than twice the best Put OI (80,000: 4,542.4). This imbalance primarily suggests bullish market bias, positioning more traders rather than reducing price increases.
Between March 8 and March 10, the total OI fell from $4.526 billion to $3.8656 billion. That’s a drop of about $670 million. The drop will range from $86,732 to $80,688 following a decline in Bitcoin. Typically, a decrease in OI indicates that the trader is closing the option position rather than opening a new one. Given the price decline, if prices drop, traders with short or hedge positions could be shut down. This is consistent with a significantly lower OI for Puts.
The overall decline in OI indicates that traders are adjusting their positions in response to price movements. This indicates a short-term response to changes in conditions and may result in lower volatility due to less open positions to promote price fluctuations.
A pivotal metric for this analysis is the maximum pain price calculated at $80,000. This number represents the act price at which the total value of invalid options is maximized. When Bitcoin prices settle at $80,000 on expiration date, the number of option owners is the highest, and premiums evaporate, offering the greatest “pain” while minimizing option writer payments. It positions $80,000 as a neutral anchor for the market. This is a potential gravity center where bullish and bearish positions can balance.
Put Options clustering is under $80,000 and could serve as a support zone for Bitcoin prices. If prices drop towards these levels, Put Holders could exercise options, buy Bitcoin to cover positions, and stabilize the decline. Conversely, a high call OI of $100,000 and $120,000 can act as a resistance. As Bitcoin approaches these strikes, call holders can cash out profits and exercise their options, limiting upward momentum and creating caps for price growth.
Postbullsh bets skyrocket as Bitcoin Call Options’ target $120K strike first appeared on Cryptoslate.
