(CTN News) – Then, according to data tracked by Swiss-based Laevitas, the notional open interest of bitcoin and ether options contracts on Deribit, the leading bitcoin and ether exchange, has risen to a total of $20.64 billion, a 14 percent increase from a year ago.
In terms of the price, the tally almost matches the peak reached on Nov. 9, 2021, when bitcoin traded at an all-time high of $66,000, which was 90% higher than the going market rate of $34,170.
Therefore, the open interest in contract terms at the present time is significantly higher than it was at the end of November 2021.
“The milestone has been achieved with nearly double the number of outstanding contracts, not only a considerable achievement for Deribit, but also a clear indication of the broader market growth and the escalating interest among our clients in options,” Luuk Strijers, chief commercial officer at Deribit, informed CoinDesk in a statement to CoinDesk.
There is a 90% market share of crypto options in the world that is controlled by Deribit.
It is important to note that options are derivative contracts which give the purchaser the right, but not the obligation, to buy or sell the underlying asset at a predetermined price on or before a specific date based upon a predetermined price.
In a call option, the buyer has the right to buy the option, while in a put option, the seller has the right to sell it. Call buyers are implicitly bullish on the market, while put buyers are implicitly bearish on the market.
As a result of this record activity, the flows in the options market tied to investors and market makers will have a greater impact on the price of the spot market.
It has been reported recently that market makers are holding a net short gamma exposure to bitcoin on their balance sheets.
This may be due to the fact that they may have bought the top cryptocurrency as it rose to adjust their overall exposure back to neutral, inadvertently accelerating the price rally. In the last two weeks, Bitcoin has gained 30% in value to trade above $34,000 for the first time ever.
During the course of today, at the time of 08:00 UTC, BTC and ETH options contracts worth $4.5 billion will expire on Deribit. As a result of settlements, the crypto market experiences volatility on a monthly and quarterly basis.
Bitcoin open interest consists primarily of ITM calls or calls at strikes below BTC’s going market rate. As bitcoin increased from $27,000 to $35,000 over the past two weeks, traders snapped up calls.
Call options are in the money (ITM) when the current market price of the underlying security exceeds the strike price of the call option. In the case of a put, it is said to be in the money when the underlying asset’s price is lower than the strike price of the put.
According to Strijers, 4.5 billion options will expire on Friday – a high value of options of which an unusual percentage will expire in the money (ITM) as a result of the recent market movement.