Options on BlackRock’s iShares Bitcoin Trust ETF (IBIT) made waves on November 19, when the newly launched market recorded $1.9 billion in trading volume. At X, after a day with surprising imbalances in contracts, few analysts considered the launch a success.
There are 288,740 call (buy) options compared to 64,970 put (sell) instruments, which is an astonishing ratio of 4.4:1.
On the surface, this suggests an overwhelmingly bullish sentiment, with some contracts suggesting Bitcoin (BTC) price above $170,000. But is this optimism justified, or are these deals more complex than they appear?
How are IBIT Bitcoin Options used?
Options are financial instruments that allow traders to bet on price movements or hedge risk without purchasing the underlying asset directly.
Among the IBIT options, a surprising 9,500 contracts were traded on the $100 call option expiring on December 20th. At first glance, this suggests that traders are betting on Bitcoin surging. However, these contracts are priced at just $0.15 each, or 0.3% of IBIT’s current price of $53.40. This price indicates that Bitcoin is unlikely to reach its implied price of $175,824.
Some investors use these inexpensive options as lottery tickets. While eye-catching, these contracts often distort perceptions of market sentiment.
IBIT ETF option prices as of November 20. Source: Nasdaq
For a more grounded example, consider the $65 IBIT call option expiring January 17th. The price is $2.40 per contract (4.5% of the IBIT price). The trade becomes profitable when Bitcoin reaches approximately $114,286 by expiration, reflecting a 22% rise in two months.
Meanwhile, sophisticated traders can use strategies such as synthetic buying. One user, “elwalvador,” for example, sold a $50 put option and bought a $60 call option at the same price ($2.15), effectively duplicating Bitcoin ownership without holding any assets.
Other strategies include covered calls, where investors holding IBITs sell call options to generate immediate profits. For example, if the IBIT trading price is $53.40, you can sell a $55 call option expiring in January for $5.20. This means that investors raise money upfront, but agree to limit their upside if IBIT exceeds $55. If IBIT closes at $45 or $50, the call expires worthless and the investor retains the $5.20 premium, cutting losses or adding to profits.
The “bullish call spread” strategy predicted a profit or loss. Source: Strike
Likewise, a “bullish call spread” aims for a moderate price increase while limiting risk. A trader can buy a $53 call for $6.20 and sell a $58 call for $4.10, for a cost of $2.10. If IBIT closes at $58, the $5 value of the spread results in a profit of $2.90 ($5 – $2.10 cost).
Will Bitcoin price go to $170,000 simply because of IBIT options activity?
The $170,000 Bitcoin forecast is not a market consensus, but rather an outlier created by low-cost, high-return transactions. IBIT options were awash with speculative bets, particularly the February and May 2025 contracts, which saw a call-to-put ratio of 6.7:1. However, the probability of such an extreme outcome is very low.
Options provide leverage, allowing you to invest in smaller amounts for larger potential gains. However, if the price of the asset does not move as expected, it may expire worthless. The implications for retail investors are clear. Bitcoin ETFs and their options offer new ways to earn money, but it is important to understand the mechanisms and odds.
This article is written for general information purposes and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.