Surging volumes in put choices linked to BlackRock’s Nasdaq-listed spot bitcoin ETF (IBIT) might be interpreted as bearish sentiment. That is not essentially the case.
On Friday, greater than 13,000 contracts of the $30 out-of-the-money (OTM) put choice expiring Could 16 modified palms because the ETF rose 1.7% to $57.91, in line with information from Amberdata. Quantity within the $35 put choice expiring Jan. 16, 2026, topped 10,000 contracts.
Many of the exercise most likely stems from market members trying to generate passive earnings via “cash-secured put promoting” fairly than outright buy of the choices as bearish bets, in line with Greg Magadini, Amberdata’s director of derivatives.
A put vendor, providing insurance coverage in opposition to worth drops in return for a premium, is obligated to buy the underlying asset at a predetermined worth on or earlier than a selected expiration date. (That is against the client of the put, who has the suitable however not the duty to promote the asset.)
Which means savvy merchants usually write OTM places to accumulate the underlying asset at a lower cost whereas pocketing the premium acquired by promoting the put choice. They achieve this by repeatedly sustaining the money required to buy the asset if the proprietor of the put choice workouts their proper to promote the asset.
Therefore, the technique is named “cash-secured” promoting of places. In IBIT’s case, sellers of the $35 put expiring in January 2026 will hold the premium if IBIT stays above that stage till expiry. If IBIT drops under $35, the put sellers should purchase the ETF at that worth whereas conserving the premium acquired. The sellers of the $30 put expiring in Could subsequent yr face the same payoff situation.
“The $35 Places for Jan 2026 traded +10k contract with an IV vary of 73.52% to 69.94%, VWAP at 70.75% suggests internet promoting from the road… doubtlessly Money Secured put promoting flows (for merchants who missed the rally),” Magadini mentioned in a word shared with CoinDesk.
Saxo Financial institution’s analyst instructed cash-secured put promoting as the popular technique in Nvidia early this yr.
Calls are pricier than places
Total, IBIT name choices, which provide an uneven upside to consumers, proceed to commerce pricer than places.
As of Friday, call-put skews, with maturities starting from 5 to 126 days, had been optimistic, signaling relative richness of implied volatility for calls. The bullish sentiment is per the pricing in choices tied to bitcoin and buying and selling on Deribit.
On Friday, IBIT recorded a internet influx of $393 million, representing nearly all of the whole influx of $428.9 million throughout the 11 spot ETFs listed within the U.S, in line with information tracked by Farside Buyers.
