Are spot Bitcoin ETF options traders really expecting a $176K BTC price?
2024-11-21

Options on BlackRock's iShares Bitcoin Trust ETF (IBIT) made waves on Nov. 19, when its newly launched market recorded $1.9 billion in trading volume. On X, a handful of analysts deemed the launch a success, after the day wrapped up with a startling imbalance in the contracts. 
There were 288,740 call (buy) options compared to the 64,970 put (sell) instruments, or a staggering 4.4-to-1 ratio. 
On the surface, this suggests overwhelming bullish sentiment, with some contracts implying Bitcoin BTCUSD prices above $170,000. But is this optimism warranted, or are these trades more complex than they appear? 
How are IBIT Bitcoin options being used?
The options are financial instruments that allow traders to bet on price movements or hedge risks without buying the underlying asset directly. 
Among IBIT options, the $100 call expiring on Dec. 20 saw a surprising 9,500 contracts traded. At first glance, this suggests traders are betting on Bitcoin skyrocketing. However, these contracts are priced at just $0.15 each, or 0.3% of IBIT’s current price of $53.40. This pricing indicates a low probability of Bitcoin hitting the implied $175,824 equivalent price. 
Some investors use these low-cost options as lottery tickets. While eye-catching, these contracts often distort the perception of market sentiment. 
For a more grounded example, consider the $65 IBIT call option expiring on Jan. 17, priced at $2.40 per contract (4.5% of IBIT’s price). This trade becomes profitable if Bitcoin reaches approximately $114,286 by expiry, reflecting a 22% rise in two months. 
Meanwhile, sophisticated traders might use strategies like a synthetic long. One user, “elwalvador,” shared an example: selling a $50 put and buying a $60 call for the same price ($2.15), effectively replicating Bitcoin ownership without holding the asset.
Other strategies include a covered call, where an investor holding IBIT sells a call option to generate immediate income. For instance, with IBIT trading at $53.40, they could sell a $55 call option expiring in January for $5.20. This means the investor collects the money upfront but agrees to cap their upside if IBIT exceeds $55. If IBIT closes at $45 or $50, the call expires worthless, and the investor keeps the $5.20 premium, reducing their loss or adding to their return. 
Similarly, “bull call spreads” target moderate price increases while limiting risk. A trader could buy a $53 call for $6.20 and sell a $58 call for $4.10, netting a $2.10 cost. If IBIT closes at $58, the spread’s $5 value results in a $2.90 gain ($5 - $2.10 cost).
Is Bitcoin price going to $170K simply because of IBIT options activity? 
The $170,000 Bitcoin projection isn't a market consensus, it’s an outlier created by low-cost, high-reward trades. IBIT options have been flooded with speculative bets, particularly on February and May 2025 contracts, which show a 6.7-to-1 call-to-put ratio. However, the odds of such extreme outcomes are minimal. 
Options offer leverage, allowing smaller investments for outsized potential gains. Yet, they can expire worthless if the asset price doesn’t move as expected. For retail investors, the takeaway is clear: Bitcoin ETFs and their options provide new ways to profit, but understanding the mechanics and probabilities is key.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.