The Bitcoin (BTC) price is slowly recovering after a sharp 16% correction in the early hours of April 18.
While some analysts owe 9,000 BTC deposits on Binance, others focused on the low hash rate caused by a coal mining accident in China. Regardless of the reason for the $ 51,200 decline, options makers were forced to adjust their positions.
As a rule, arbitration agencies look for a non-directional effect, ie they do not focus directly on the movement of BTC in a specific direction. To neutralize the exposure to the option, a dynamic hedge is usually required, which means that positions must be adjusted in line with the bitcoin price.
Risk adjustments to these arbitration plans usually involve selling BTC when the market is down, putting pressure on long-term liquidation as a result. Therefore, it makes sense to understand the current level of risk when options approach the expiry date of 23 April. We will try to analyze whether the bears take advantage of the $ 50,000 BTC price.
Initial expectations seem balanced
Prior to the correction on April 18, BTC had gained 74% in three months, reaching a full-time high of $ 64,900. Therefore, it is only natural for investors to take defensive options more seriously.
Bitcoin April 23 – options cumulative. Source: Bybt
While a neutral bullish buy option gives the buyer protection against price increases, the opposite happens with a bearish (sell) position. By measuring the risk exposure for each price level, traders can understand how they position themselves in bullish or bearish positions.
The total number of contracts expiring on April 23 is 27,320 BTC, which is $ 1.55 billion dollars at the current price of $ 56,500. However, the bears and bulls are clearly in balance, with the (long) call options accounting for 45% of it open interest rates.
Bjørner is in good progress after a recent accident
While the original image looks neutral, keep in mind that call (buy) options for $ 64,000 and higher options are virtually useless, as there are only less than three days left until expiration. A more bearish situation arises when the 6,400 bullish contracts currently traded for less than $ 50 are removed.
Neutral bearish options are dominated by 70% of Bitcoin’s remaining 19,930 contracts. The open interest rate is $ 1.13 billion at today’s bitcoin price, giving the bear a $ 450 million advantage.
It can be seen that the bulls were surprised when Bitcoin regained 13% from its full time on April 14. Lean BTC 3000 calls remained below $ 58,000, which was only 24% of the total.
Meanwhile, the neutral bearish options are 9000 contracts on BTC to $ 55,000 and above. This difference represents an open interest rate of $ 340 million for the bears.
Currently, expiration dates between $ 57,000 and $ 64,000 are fairly balanced, indicating that the Bears have an incentive to keep the price down on April 23.