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Unprecedented Spike in Bitcoin Options Activity on CME as Traders Place Bull Bets

The Bitcoin options activity spiked on the Chicago Mercantile Exchange on Wednesday as a large number of stakeholders carried out transactions and bets on BTC call options. A whopping 48 million USD worth of bitcoin options were traded on the CME, making its most massive figure recorded since the end of July.

Skew Reported 300 Percent Increase in BTC Call Options Activity

As per data provider Skew, there was an increase of massive 300 percent in the overall call options trading on Wednesday as compared to 12 Million USD traded on Tuesday. Emmanuel Goh, the CEO of Skew further opined “The CME options had a strong session, and the spike in the volume was mainly due to increased activity in call options.”

The Bitcoin traders are hopeful that the valuation of BTC would be higher in the near term. Bitcoin is doing well from past few weeks, wherein it even recorded a continuous 62 days of staying above the 10000 USD mark a few days ago. 

Understanding Call Options and Bull Call Spread

Bitcoin ‘call options’ allows the token holders to procure a digital asset like Bitcoin at a prescribed price within a specified timeframe. With massive options contracts, the holders traded assets on CME extensively over the last few hours, thereby surging the activity. 

The traders likely adopted the method, called Bull Call Spread, in which they bet on the limited increase in the stock price. In this, the traders bet on two call options to hypothetically create a range of strike prices to play within. This strategy ensures the safety and restrained losses in the stocks; however, the gains are also restricted. In all, it is a safe play within which the bonds, currencies, digital assets, and currencies work as the holdings for the supposed call options.

Conclusion

Since options are highly versatile financial products, they allow buyers and sellers to trade in with flexibility. The recent surge accounts for traders buying call options at a strike price of 14 thousand USD and Selling call options at 16 thousand USD. The March 2021 expiring call options were purchased at 18 thousand USD and Sold at 20 Thousand USD.

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