Bitcoin options expiring on Election Day draw $375M from investors

Bitcoin (BTC) options set to expire on Nov. 8, 2024 — Election Day in the United States — have attracted significant investor attention.

According to Deribit market data, the cryptocurrency exchange’s Bitcoin options are currently betting on an average price of over $60,800 on election day. The open interest for Nov. 8, 2024 is also considerably high — at nearly $374.4 million as of writing.

Deribit announced this peculiar kind of options contract back on July 16, 2024, citing client demand as the reason. The company wrote at the time:

“The early introduction is aimed at enabling our clients to position themselves effectively for the upcoming 5 November US elections, speculate, hedge, and more.”

According to an Aug. 20 Coindesk report, call options, which do not limit upside payoff potential but also allow for unlimited loss, account for 67% of the open interest. The rest of the volume is constituted by put options, which offer some protection against price drops.

Algorithmic trading firm Wintermute said in a note shared with CoinDesk:

These election-dedicated contracts allow investors to capitalize on the increased interest by speculating on how the election might affect the crypto markets in a targeted way. The current put-call ratio of 0.50 indicates a bullish sentiment, with twice as many calls traded as puts.

The call option at a strike price of $80,000 is the most popular, with more than $39 million of open interest. Most of the open interest is concentrated in higher strike call options, from $70,000 to $140,000. Traders are seemingly anticipating new record prices around election time. Wintermute wrote:

The concentration of call options’ open interest at strikes around $80K and $100K suggests that market participants are positioning for potential upside in bitcoin, while the presence of puts at lower strike price of $45,000 indicates some level of hedging or downside protection.

The report follows the U.S. Securities and Exchange Commission delaying its decision on whether to approve the trading of options on exchange-traded funds (ETFs) that invest directly in Bitcoin back in March.

More recently, the New York Stock Exchange and Nasdaq both withdrew their three requests for permission to list Bitcoin spot ETF-based options. On Aug. 13, NYSE Arca withdrew another requested rule change intended to chart a path toward listing crypto ETF options.

Featured image via Ideogram.

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