Bitcoin Options Volume on CME Jumps 300% as Traders Take Bullish Bets

Oct 8, 2020 at 11:56 UTCUpdated Oct 8, 2020 at 11:59 UTC.Activity in bitcoin options listed on the Chicago Mercantile Exchange surged Wednesday, as investors traded call options, or bullish bets.

According to data source Skew, the CME traded $48 million-worth of options during the day - the highest daily volume figure since July 28.The number marks a 300% rise from Tuesday's figure of $12 million.

"The CME options had a strong session, and the spike in the volume was mainly due to increased activity in call options," Skew's Goh told CoinDesk over Telegram.

Options are derivative contracts used to hedge against sudden price swings or uncertainty in the spot market.

A call option gives the holder the right to buy or sell the underlying asset at a predetermined price on or before a specific date; a put option represents a right to sell.

Volumes surged as some traders took $14,000 and $16,000 strike prices and $18,000 and $20,000 strike prices for the December 2020 and March 2021 expiry contracts, Skew noted early Thursday.

These could be bull call spreads, Vishal Shah, an options trader and founder of derivatives exchange Alpha5, told CoinDesk and added that traders are unlikely to take bear call spreads in the current low volatility environment.

To simplify, traders likely bought call options at $14,000 expiring in December and simultaneously sold December expiry calls at $16,000.

Traders employ bull call spreads when they expect the underlying asset to chart a limited rally in the near term.

The data suggests some traders foresee a bitcoin rally, but believe the upside will be capped near $16,000 until the end of December.