Option Flow: BTC Halving Play

In this week’s edition of Option Flows, Tony Stewart is commenting on the recent market movements with large moves across the whole market.

When 3 weeks ago a large purchase of Apr+Jun+Sep+Dec 65k+ Calls was made, it was interpreted as a Halving play.

But ETF flows, sentiment, and FOMO induced a 35% Spot rally and now the 65k+ Calls are potent.

Under-exposed scrambled to buy Calls into yesterday’s blowoff-top.

2) Disbelief at the extent of this week’s rally told via Option flows: At first buying Calls, then unwinding and hedging at 57.5k, FOMOing back in >58k, TP nr 60k, some rolling up exposure, hedging as 60k support tested, and then under-exposed lifting Mar 65-80k Calls b4 a flush.

3) The 62k to 64k surge was so quick, and with high leverage across the whole system, that when sales hit the market a cascade sent BTC down to 59k in 15mins, and some Alts (also massively leveraged) dropped 50% on some exchanges before promptly bouncing as BTC jumped to 61.5k.

4) IVs had been pushing higher throughout the week, and Term-structure finally went into backwardation as the fronts pumped as a reaction to increased RV, continuation of near-dated buying, and the final surge of Calls bought as new-highs looked within reach of an explosive move.

5) Despite the large moves, the giant Call holder in Apr-Dec has not noticeably reacted. The blue positions still dominate the big picture. Since when these Calls were bought, Spot has rallied ~35%, IV has rallied ~20%, forwards rallied, Delta+Gamma has increased. Conviction.

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