Bitcoin options prices are low, traders seize the opportunity to bet on an increase

According to CoinDesk, Bitcoin (BTC) options now appear to be cheap, and some traders are taking advantage of this by betting on an increase. Options are derivative contracts that give buyers the right to buy or sell an underlying asset at a predetermined price on a future date. Call options grant buying rights, allowing traders to profit from price increases or hedge against them, while put options do the opposite. When implied volatility is below its long-term average or lower than the asset's realized volatility, traders consider options to be cheap. Bitcoin's implied volatility (IV) peaked when the US spot ETF was launched last week and has now fallen below realized volatility. According to data from Paradigm, an over-the-counter institutional cryptocurrency trading network, this has sparked demand for call options with strike prices of $45,000 and $46,000 during North American trading hours on Thursday. In a Telegram broadcast, Paradigm stated: "We see significant buyers of February $44k straddles as well as some pure call buying at $45k/$46k strikes." Since early 2023, Bitcoin's price and implied volatility have mostly shown a positive correlation. Straddle options are a non-directional strategy involving simultaneous purchase of both call and put options with the same strike price in order to profit from expected increases in implied volatility and option prices. Since the launch of the ETF on January 11th, Bitcoin has dropped more than 15%, with prices briefly falling below $41,000 on Thursday evening.