Options Market Analysis

As inflation and Corona virus were expected to be the most important risks in the markets, these days war between Russia and Ukraine has become the most important risk for the markets. According to the risks, fear can be seen in all markets. Fear caused crypto market to react and the price of Bitcoin dipped below 40k again. Today I am going to write about what is going on in options market for Bitcoin.

First of all if we take a look at chart below on monthly time frame for Bitcoin we can see that kijun-sen acted as a good support for Bitcoin during previous months. Bitcoin must hold above this support on monthly time frame in order to reach higher prices.

On weekly time frame, Bitcoin did not close a full body candle below the Ichimoku cloud which acts as a good support for now. Since November 15, according to the directional movement index (DMI), by moving the -DI line (red line) above the +DI line (green line), the market has entered a downtrend. Still –DI is above +DI and if +DI>-DI there will be a good sign for Bitcoin.

Since first week of this year skew continues to move in favor of puts for Bitcoin and despite some call activities in recent days it is still below zero.

Short dated ATM IV spiked and declined very fast while long dated ATM IV remain stable.

According to option flows since last week charts show Jun 45k/60k & 40k/70k call spread, April 60k calls and call buyer of Mar11 for 42k strike price.

We can see more calls activities since last days from block traders.

Max pain price — the strike price that brings maximum loss to option buyers increased after the huge expiry of 31Dec2021 Bitcoin options contracts and reached 55k BUT due to the negative sentiment in the options market it decreased and for now it is 42k for 25Mar2022 expiry. @laevitas

In conclusion due to possible macro risks and global uncertainty still fear can be seen in market. It is very hard to say that we are entering a new bull run but it seems that for midterm Bitcoin may see 50k-65k zone again.

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