Surging volumes in put choices linked to BlackRock’s Nasdaq-listed spot bitcoin ETF (IBIT) could possibly be interpreted as bearish sentiment. That is not essentially the case.
On Friday, greater than 13,000 contracts of the $30 out-of-the-money (OTM) put possibility expiring Might 16 modified arms because the ETF rose 1.7% to $57.91, in accordance with information from Amberdata. Quantity within the $35 put possibility expiring Jan. 16, 2026, topped 10,000 contracts.
Many of the exercise in all probability stems from market members seeking to generate passive revenue by means of “cash-secured put promoting” relatively than outright buy of the choices as bearish bets, in accordance with Greg Magadini, Amberdata’s director of derivatives.
A put vendor, providing insurance coverage in opposition to value drops in return for a premium, is obligated to buy the underlying asset at a predetermined value on or earlier than a selected expiration date. (That is against the client of the put, who has the suitable however not the duty to promote the asset.)
Meaning savvy merchants usually write OTM places to accumulate the underlying asset at a cheaper price whereas pocketing the premium obtained by promoting the put possibility. They achieve this by constantly sustaining the money required to buy the asset if the proprietor of the put possibility workouts their proper to promote the asset.
Therefore, the technique known as “cash-secured” promoting of places. In IBIT’s case, sellers of the $35 put expiring in January 2026 will preserve the premium if IBIT stays above that stage till expiry. If IBIT drops under $35, the put sellers should purchase the ETF at that value whereas protecting the premium obtained. The sellers of the $30 put expiring in Might subsequent 12 months face an identical payoff state of affairs.
“The $35 Places for Jan 2026 traded +10k contract with an IV vary of 73.52% to 69.94%, VWAP at 70.75% suggests internet promoting from the road… probably Money Secured put promoting flows (for merchants who missed the rally),” Magadini mentioned in a observe shared with CoinDesk.
Saxo Financial institution’s analyst advised cash-secured put promoting as the popular technique in Nvidia early this 12 months.
Calls are pricier than places
General, IBIT name choices, which supply an uneven upside to patrons, proceed to commerce pricer than places.
As of Friday, call-put skews, with maturities starting from 5 to 126 days, had been constructive, signaling relative richness of implied volatility for calls. The bullish sentiment is in keeping with the pricing in choices tied to bitcoin and buying and selling on Deribit.
On Friday, IBIT recorded a internet influx of $393 million, representing nearly all of the whole influx of $428.9 million throughout the 11 spot ETFs listed within the U.S, in accordance with information tracked by Farside Traders.
