On November 16, Deribit, the prominent crypto options exchange, achieved an unprecedented milestone by reaching a historic high of $15 billion in notional open interest in Bitcoin options.
Surging Open Interest and Market Trends
The concept of open interest, signifying the total value locked in active options contracts, has witnessed exponential growth in Bitcoin. Since September, the open interest for Bitcoin options has more than doubled in size. During October 2021’s bullish market momentum, when Bitcoin surged above $60,000 in market value, the peak reached $14.36 billion in notional open interest.
Deribit stands out as the largest options exchange for crypto assets, dominating over 87% of the global crypto option open interest, which currently stands close to $25 billion, as of the latest data available from the Deribit exchange. Meanwhile, the open interest for Bitcoin options resides at approximately $13.8 billion.
Statement from Deribit Chief Commercial Officer
Luuk Strijers, Deribit’s Chief Commercial Officer, exclaimed,
We’re thrilled to announce our milestone achievement of reaching an all-time high of $15 billion in notional open interest in BTC options. This milestone highlights the growing inclination toward options as a strategic instrument among traders, whether for positioning, hedging, or capitalizing on the recent surge in implied volatility.
Understanding Options Contracts
Options contracts also represent financial instruments that grant the right to buy or sell the underlying asset at predetermined price. These contracts also serve as tools for traders to strategize their positions, hedge risks, or capitalize on market movements.
Options contracts in the context of cryptocurrencies operate similarly to options in traditional financial markets. An options contract gives the holder the right, but not the obligation, to buy or sell an underlying asset at a predetermined price (strike price) on or before a specified expiration date. There are two types of options: call options and put options.
Options trading has become increasingly popular as the crypto market has matured. Additionally, the crypto market can be highly volatile, adding an additional layer of risk to crypto options trading. As with any financial instrument, investors should carefully consider their risk tolerance and conduct thorough research before engaging in options trading.