A Whale Makes a Bitcoin Deal
A large Bitcoin (BTC) options trade was executed on Deribit on Wednesday morning, anticipating a shift from the current low-volatility regime to a period of high price volatility, potentially exceeding the $53,000-$87,000 range.
The deal, called a “long straddle,” saw the entity pay a net premium of more than $1 million to buy 100 call and put options at $66,000, due on November 29, according to confirmed data from Lin Chen, Deribit’s head of Asia business development.
A long straddle strategy is best used when the market anticipates a big move in either direction, making the call or put option more valuable than the total premium paid. A call option protects the buyer from rising prices and increases in value as the underlying asset rises. A put option works the opposite way, increasing in value as prices fall.
A Volatility Explosion Is Coming
Written by options trader Charles M. “When discussing ‘strangles,’ ‘straddles,’ and ‘ratioed straddle’ strategies, it is essential to understand the buying and selling of the premium (options contracts),” Cottle wrote in his book Options Trading: The Hidden Reality. “Straddle sellers want the market to stay flat, while straddle buyers (‘straddle’/‘strangle’ buyers) want the market to move."
