U.S. Elections-Linked Bitcoin Options Draw Nearly $350M in Open Interest

Four weeks ago, I started observing the trading of so-called election expiry options on Deribit, which are due for settlement four days after the November 4th elections. As of now, the total notional open interest or the dollar value of active option contracts stands at approximately $345.83 million, according to data from Amberdata.

67% of the total active contracts are call options, these have the advantage of an almost unlimited profit potential, but come with limited loss risk. The remaining 33% consist of put options, which provide protection during price decreases, resulting in a put-call ratio below 0.50.

Essentially, there were two times more open calls than puts, indicating a strong belief among traders that the election results would favor a rising market.

“These contracts tailored for elections enable investors to profit from heightened curiosity about the impact of the election on cryptocurrency markets by strategically betting. The current put-call ratio, stated at 0.50, suggests a positive outlook, as there are twice as many ‘buy’ (call) orders as ‘sell’ (put) orders, according to Wintermute’s analysis shared with CoinDesk.”

As a researcher examining options trading data, I’ve noticed that the call option with a strike price of $80,000 is the most heavily traded, boasting an open interest exceeding $39 million. Generally, the open interest for calls is predominantly clustered around higher strike prices, ranging from $70,000 to $140,000. This trend suggests that traders are strategically positioning themselves in anticipation of potential new record highs around the election period.

Meanwhile, $39 million is locked in the $45,000 put option.

“Wintermute observed that a high number of call options with a focus on prices around $80,000 and $100,000 indicate traders are anticipating Bitcoin‘s price to increase. Meanwhile, the presence of put options at a lower price point of $45,000 suggests some traders are also taking steps to protect against potential price decreases.”