🎯 Options – Market insurance and bets
Imagine being able to book a price in advance.
You don’t know yet if you’re going to use it, but you want to have the right to do so. This is the general idea of aoption. In crypto markets, options allow certain investors to protect themselves, speculate or position themselves on a specific scenario.
🎯 What are the options for?
An option gives the right, but not the obligation, to buy or sell an asset at a specific price.
There are two main families:
- 🟢Call: option linked to an increase scenario.
- 🔴Put: option linked to a decline or protection scenario.
For a beginner, the most important thing is not to trade options.
The most important thing is to understand that they can influence the areas where the market reacts.
🧠 How to interpret them?
🟢 Lots of calls
When many calls are concentrated on certain prices:
- The market anticipates or seeks an increase towards these areas.
- These levels may become important to monitor.
- The feeling may become more optimistic.
🔴 Lots of puts
When many puts are concentrated:
- Investors may be looking to protect themselves.
- The market may fear a decline.
- Certain levels can become stress zones.
Options can also create effects around expiration dates, when many contracts expire.
⚠️ What you should never do
Do not believe that options give a perfect prediction.
A large concentration of options at a price does not mean that the market will necessarily go to that price. This only means that this level attracts a lot of interest. Options are useful for spotting important areas, not as a replacement for analysis.
🤝 What to combine them with?
🧭 General Market Management
A concentration of calls has more weight if thegeneral market managementis already bullish.
A concentration of puts becomes more important if the market is fragile.
⚡ Liquidations
Options zones and liquidation zones can sometimes come together. When several major areas are close together, the market can become more nervous.
📊 ETF Bitcoin
Options also make more sense when compared to ETF flows and the behavior of institutional investors.
💡 Yapuka advice
Options allow you to see where some investors place their scenarios.
They don’t say exactly what will happen, but they show where the market’s attention is focused.At Yapuka we use them as a complementary map of important areas, to combine with price, flows, liquidations and general context.