A $3.2 million 'bitcoin butterfly' option trade bets on $95,000 by the end of October
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Summary
A $3.17 million long call butterfly options trade, executed via OTC desk Paradigm, bets on bitcoin reaching $95,000 by October 30. The strategy involves buying calls at $90,000 and $100,000 strikes while selling twice as many calls at $95,000, profiting most if bitcoin settles near $95,000 at expiry. This trade signals trader expectations for a bitcoin price rise from roughly $85,000 to $95,000 over the next four weeks.
Why it matters
The trade reflects bullish sentiment and growing demand for upside exposure in the bitcoin options market amid bitcoin's recent rally. According to the source, this momentum aligns with bitcoin surpassing key moving averages and resistance levels, suggesting potential for continued price gains. The options market is also exhibiting increased volatility expectations across major tokens, highlighting broader market activity.
Key context
The butterfly options strategy profits if the asset price settles near a targeted strike price, here $95,000, with payoff between $90,000 and $100,000. Bitcoin recently reclaimed all its long-term moving averages after about 300 days below them, marking a potential long-term uptrend. The next resistance level lies above $98,000, the January high, with the current upward momentum lacking apparent barriers between $85,000 and $98,000. The options data also show fluctuating risk reversals favoring calls amidst this rally.
Key numbers and entities
The trade involved 5 blocks of 1,000 long $90,000 calls, 2,000 short $95,000 calls, and 1,000 long $100,000 calls. The net initial cost was $3.17 million. Data sources cited include Laevitas and statements from Laser Digital and Glassnode. Coinbase Markets reported expected volatility figures through September 27, with price swing estimates of 8.9% for XRP, 8.0% for SOL, 6.9% for ether, and 5.0% for bitcoin.
What remains unclear
The identity of the trader executing the butterfly trade is not provided. The source does not specify whether the trade is speculative or hedging in nature. It also remains unknown how the broader market or institutional players are interpreting this position or if similar strategies are being widely adopted.