Bitcoin Trading Surges to $3.3 Billion with Price Rallying to Two-Month High

The recent rally in Bitcoin has ignited a surge in demand for calls and spurred increased activity in the options market.

On Wednesday, the options market witnessed a significant surge as bitcoin options contract worth $3.3 billion were traded across major exchanges, including Deribit.

This single-day notional volume represents the highest in three months, with Deribit accounting for over 80% of the global tally.

Traders have shown considerable interest in buying call options, contributing to the increased options trading volume.

Call options give the buyer the right, but not the obligation, to buy an asset at a specified price on or before a specified date. In this case, traders are betting that Bitcoin’s price will continue to rise.

Call options with strike prices ranging from $30,000 to $40,000 have gained popularity among traders in the past 24 hours.

Call spreads have accounted for 45% of the total block flows over the past week. Block trades, which involve executing large orders on over-the-counter liquidity networks like Paradigm, have seen increased participation.

The price rally has compelled some call overwriters, who sell calls against owned cryptocurrencies, to buy back their bullish exposure.

Call overwriting is a strategy used to generate additional yield in a flat-to-negative market. With the rapid upward move in Bitcoin’s price, option overwriters have been actively buying back topside options.

The surge in options trading suggests that traders are increasingly bullish on Bitcoin’s prospects. The recent rally has been driven by a number of factors, including the approval of spot Bitcoin ETFs in Canada and the United States, as well as the growing adoption of Bitcoin by institutional investors.