In the crypto landscape, ambitious forecasts are not merely speculative; they are often supported by substantial monetary commitments, predominantly through option strategies that resemble lottery tickets, offering significant returns for relatively modest investments. Currently, a standout option is the $300,000 strike bitcoin call option listed on Deribit, which is set to expire on June 26. This option essentially bets that Bitcoin’s spot price will surge to more than $300,000 by the end of the first half of the year.
As of now, over 5,000 contracts for the June $300K call option are active, with a total open interest amounting to $484 million, making it the second most favored option for the approaching June expiry, only surpassed by the $110K call option. Deribit holds the title of the premier crypto options exchange, responsible for more than 75% of the global options trading activity. In this platform, one options contract equates to 1 BTC. The quarterly expiries, including the upcoming June 26 date, tend to generate increased market volatility and activity, as traders utilize these deadlines for various strategies, such as hedging, capitalizing on profits, or speculating on future price movements.
A derivatives trader at GSR, Spencer Hallarn, noted the appeal of these high-stake options, likening them to lottery tickets. He explained that the call skew reflects a persistent interest in hyperinflation hedges, evident in the substantial open interest associated with the out-of-the-money (OTM) call at the $300K strike. OTM calls, often referred to as wings, necessitate a significant price movement of the underlying asset to yield profits, resulting in their lower cost when compared to options priced closer to or below the current market value. However, the potential returns can be enormous if the market experiences a rally, akin to purchasing a lottery ticket with long odds but a high reward.
Historically, Deribit’s BTC options market has witnessed similar trading patterns during previous bullish trends; however, these speculative bets seldom achieved the level of prominence seen now, where they rank as the second most favored choice in quarterly expiries. The open interest distribution for the June expiry reveals that the $300K call option is gaining substantial traction, as illustrated by the accompanying chart.
GSR’s Trader Simranjeet Singh attributed the significant open interest in the $300K call option to a combination of factors, including the anticipation of a pro-crypto regulatory environment in the U.S. and speculation surrounding the potential establishment of a BTC strategic reserve, a concept that has been floated since the current administration took office.
In a recent address, Senator Cynthia Lummis expressed her satisfaction with President Trump’s endorsement of her BITCOIN Act, which she claims presents the only viable solution to the nation’s staggering $36 trillion debt. “I’m thankful for a forward-thinking president who not only recognizes this but acts on it,” Lummis stated in a post on X.
Who is behind the $300K calls?
Amberdata’s Director of Derivatives highlighted notable selling activity in the $300K call option set to expire on June 26, which took place in April as part of a covered call strategy. This trading method is utilized by investors to earn extra income from their holdings in the spot market. “I believe the selling volume observed on April 23 was primarily from traders looking to generate returns on their long positions,” Magadini explained to CoinDesk. Each option was sold for approximately $60, reflecting an implied volatility of 100%. Selling higher strike OTM call options while maintaining a long position in the spot market is a widely adopted strategy for generating yields in both the cryptocurrency and traditional investment arenas.
