Traders celebrate Bitcoin’s upcoming ETF, but the options market is not sure


The U.S. Securities and Exchange Commission (SEC) is expected to make a ruling on October 18 on whether to approve the Bitcoin Exchange Traded Fund (ETF) application filed by asset management company ProShare Capital Management.

As previously reported by Cointelegraph, SEC Chairman Gary Gensler recently suggested Regulators are more inclined to approve The indirect exposure bitcoin futures ETF under the Investment Company Act of 1940.

On October 15, the Nasdaq Stock Market Certification registration Valkyrie’s Bitcoin strategy ETF shares are listed. The deadline for the US Securities and Exchange Commission to officially approve Valkyrie ETF applications is October 25, but this may be extended to December 8.

The implied probability of a $70,000 call option reaches 25%

Two weeks ago, finding investors willing to bet $70,000 in Bitcoin would be a daunting task (Bitcoin) Prices on October 29. It needs to be 62% higher than the price of $43,100 on September 30, which seemed a bit far-fetched at the time. Therefore, the October $70,000 BTC call (buy) option was traded on Deribit at the price of $194 or 0.0045 BTC on September 30.

Bitcoin’s BTC call option price on October 29.Source: Dribit

As shown above, the current trading price of the same option is $1,570, or 0.0262 BTC, because Bitcoin has risen 39% so far this month to $60,000. Therefore, although there is still a long way to go from the $70,000 call option, the odds have increased significantly.

Even if the BTC price rises, the implied option probability (delta) is currently 25%, which may look bearish at first glance.

Traders should not literally understand option probability

Option pricing depends to a large extent on the distance to the expiry date. Considering Bitcoin’s daily volatility of 4%, anything can happen before the rights expire on October 29. Therefore, traders should not pay too much attention to the implicit probability (delta) of options.

In order to better assess the possibility of Bitcoin ETF approval before the end of the month, an increment of $50,000 should be used as the “base” scenario. Traders should assume that a 17% price drop will clearly indicate that the SEC’s decision has been delayed or rejected.

Considering that the delta or implied probability of a $50,000 call option transaction is 84%, the probability that investors will price the end of the world scenario is 16%.

At the same time, the $70,000 call option at 8:00 AM UTC on October 29 indicates that the ETF has been approved, with an implied probability of 25%. The options market undoubtedly shows a higher positive trend, but it is far from certain.

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