Options trading has become a vital tool for gauging market sentiment and predicting volatility in the Bitcoin market. Previous analysis revealed that options significantly influence Bitcoin’s price volatility. Options data has shown a substantial concentration of open interest (OI) at the $120,000 strike price for contracts expiring at the end of the year, with over $640 million in OI on Deribit alone.
This focus on a single strike price indicates optimism about a price increase, but it could also lead to high volatility in the coming weeks. The delta, a key options metric, represents the sensitivity of an option’s price to changes in the underlying asset. For the $120,000 strike expiring on December 27, the delta is approximately 0.10, suggesting a 10% chance that Bitcoin will reach or exceed this price by year’s end.
High open interest on such a high strike price indicates that the market is preparing for a sharp price increase. Deribit’s dominance in the Bitcoin options market shows the dominance of crypto-specific platforms. The concentration of activity at distant strikes suggests that traders expect Bitcoin’s price to exhibit high levels of volatility leading into the end of the year.
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