Bitcoin put-call open interest has jumped to a half-year’s high of 0.62 from 0.42 earlier in the month amid a crypto rout that has seen the asset lose half the value since November.
Paradigm’s director of institutional sales and trading, Patrick Chu, says that the ratio shows that the demand for puts is up. Chu adds that the market shows risk reversal flow where users purchase puts and sell calls.
Put-call open interest ratio ascertains the number of open positions in put options compared to those in calls.
A put entitles the user with the right but not the obligation to sell the underlying asset at a given price on a future date, while the call is the reverse.
A sudden surge in the market represents an extended bearish momentum that is often seen at the end of a bear run.
Call-put skew, another price differentiator between the two options, reveals a put bias. The skew is the direction of the options premium.