Deep OTM Bitcoin Options Reflect Volatility Bets, Not Bearish Positions
Traders are showing growing interest in deep out-of-the-money (OTM) bitcoin options with longer-dated expiries, signaling a focus on volatility rather than pure downside bets.
On Deribit, the $20,000 strike put for June 2026 ranks as the second most popular option, with notional open interest exceeding $191 million. Other active OTM puts for the same expiry include $30,000, $40,000, $60,000, and $75,000 strikes. These contracts, far below bitcoin’s current price near $90,500, are cheaper than options closer to the spot.
While deep OTM puts are often interpreted as bearish hedges, the current flow includes high-strike calls above $200,000, indicating that traders are targeting extreme price swings rather than directional moves. “These are essentially cheap lottery tickets on a potential volatility explosion over the next six months,” said Sidrah Fariq, Deribit’s Global Head of Retail.
Fariq noted that these “deep wing” trades allow institutions to manage tail risk and profit from asymmetric price movements. If BTC moves sharply in either direction, holders of both OTM puts and calls could see outsized payoffs, though flat markets would quickly erode value.
Options markets, including those linked to BlackRock’s IBIT ETF, have evolved into arenas where institutions strategically manage volatility, time decay, and complex risk exposures. Despite this focus, BTC puts continue trading at a premium to calls across tenors, partly due to call overwriting strategies designed to boost yields on spot holdings.
