Everyone cheers a Bitcoin ETF, but options market data shows that the chance that Bitcoin will trade above $ 70,000 on October 29th is only 25%.
The US Securities and Exchange Commission (SEC) is expected to make a decision on October 18 on whether to approve a Bitcoin ETF application from ProShare Capital Management.
As reported by Cointelegraph, SEC chairman Gary Gensler recently pointed out that the regulator tends to indirectly approve BTC futures ETFs under the Investment Company Act of 1940.
On October 15, the Nasdaq Stock Market certified the listing of Valkyrie’s Bitcoin Strategy ETF shares. The deadline for the SEC’s official approval of Valkyrie’s ETF application is October 25, but could be extended to December 8 on the New York Stock Exchange. The approval deadline for ProShares Bitcoin ETFs is October 18, and this is the fund’s first expected launch.
Only 25% of the puts target $ 70,000 on Bitcoin
As recently as two weeks ago, it was hard to see an investor willing to put the BTC price at $ 70,000 for October 29th, as it had to rise 62% from $ 43,100 on October 30th and at that time seemed far-fetched. On September 30, a Bitcoin call option of USD 70,000 was traded on Deribit for USD 194 (0.0045 BTC).
Bitcoin Call option price on October 29th in BTC | Source: Deribit
As shown above, a $ 70,000 BTC call option is currently trading at $ 1,570 (0.0262 BTC) as it is up 39% to top $ 60,000 this month to date Act. While that’s still a long way to go for a $ 70,000 call, the odds have increased significantly.
Even if the BTC price rises, the implied option probability (delta – a percentage indicator that reflects the degree of uncertainty or the risk perceived by traders) is currently 25%, looks bearish at first glance.
Real traders are not allowed to accept options
The option price depends heavily on the expiry time. Given Bitcoin’s 4% daily volatility, anything can happen before the option expires on October 29th. Therefore, traders shouldn’t rely too much on deltas.
To better estimate Bitcoin’s ETF approval rate at the end of the month, use the $ 50,000 delta as a background scenario. Traders should note that a 17% drop in Bitcoin price would definitely signal that a decision by the US Securities and Exchange Commission has been delayed or rejected.
Given that the $ 50,000 call is trading with 84% delta or implied probability, investors are placing 16% odds on the doomsday scenario.
Meanwhile, a $ 70,000 call option that expires on October 29th at 3 p.m. (UTC) has defaulted on the approved ETF, giving an implied probability of 25%. The options markets show significantly higher chances of positive movement, but are uncertain.
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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
According to Cointelegraph