A month ago, it was difficult to find an investor expecting the price of Bitcoin (BTC) to hit $ 32,000 in January. At the time, October 30th required a 140% bullish potential from the $ 13,300 price, which seemed a long way off.

Thus, a buy (buy) of $ 32,000 BTC in Deribit was sold for a modest $ 67 or 0.005 BTC at the end of October.

Fast forward to the present moment and the buy option itself peaked at $ 705. It is approximately 10 times over four weeks. Keep in mind that despite the $ 19,484 rally, a potential 67% increase is still needed to reach $ 32,000.

Despite the recent increase in the price of BTC, the probability implicit in the option (delta) is currently 11%. The price of the call option also increased due to the change in Bitcoin’s volatility, as sellers will demand a greater premium for taking risks in uncertain markets.

Strong price fluctuations, regardless of direction, will increase volatility, and any unexpected news flow usually causes the index to rise.

Notice how Bitcoin’s volatility has increased from 57% on October 30 to 78% this week. This event is particularly optimistic for call buyers. Even if the price of BTC is the same, the option price will rise accordingly.

Don’t take the possibility literally
The price of the options also depends greatly on the extent of the expiration date. The same $ 32,000 call could be deemed useless two days before it’s due. Therefore, traders should not be too concerned with the implied probability (delta).

By examining the December 25 call options, an investor can conclude that the odds of 26% of $ 20,000 appear to be weak. After all, an infusion of 18% for a month seems inappropriate. Merchants tend to have short-term memories, but the 18% increase in 30 days occurred in 9 of the past 12 months.

The last time a monthly pump was 18% or more was not so long ago. Bitcoin closed at $ 11,645 on August 23, up 22% from the previous month.

Traders and investors should consider purchasing options with longer expiration dates. Those who were brave enough to bet a 150% increase in BTC price a month ago are very happy with the results.

Source: CoinTelegraph