Options in Action — July 27

Chart of the Day

Awakening. The derivatives market, which has been slumbering since the May crash, is back with some action, as the price of Bitcoin rode the wave of bullish rumors and rose 15% in 24 hours to top $40k, albeit briefly. The options market saw a significant spike in volume, breaking its rather consistent pattern throughout July, while open interest is up by at least $1 billion. Relatively large call buying for near-term expiries was observed over the weekend, triggering a rise in volatility — though not remotely close to previous highs this year. August/September calls show a preference for strikes outside the current consolidation range between $29k to $40k, indicating that some big players are betting on more volatility.

Talk of the Town

Elon Musk: I am not selling any bitcoin, nor is SpaceX or Tesla. 

Tesla’s Q2 earnings report released on Monday affirms Musk’s statement that Tesla neither purchased nor sold Bitcoin in Q2. The company’s unaudited statement of cash flows reveals that it recorded Bitcoin-related impairment of $23 million in Q2 as the crypto markets suffered from massive price plunges. Tesla’s current Bitcoin holding is worth approximately $1.3 billion.