“Call spreads remain attractive for anyone wanting exposure to the recovery after the post-quarter reset. And they now look even better on a relative flight basis, since long call spreads are buying the cheaper wing of a bias that leans the other way,” he said.
A number of factors could increase volatility in the short term. Friday’s options expiration, for example, which Péquignot described as “traditionally one of the most important liquidity events on the annual calendar.”
Additionally, before expiration, options traders who have purchased puts, or downside bets, in recent months, make profits. In other words, they are in the money, while those who purchased call options will see their bets expire worthless.
“With a spot at 64,000, the June 26 book consists of net long in-the-money positions and long out-of-the-money calls – the built-in loss is seated among call buyers who pursued strikes over 80,000,” Pequignot noted.
The sharp decline in Alphabet (GOOG) and SpaceX (SPCX) shares, as well as declines in Asian stock indexes, are another factor that could fuel volatility in bitcoin, which often takes cues from tech stocks.
Not to be forgotten is that the Fed’s preferred inflation measure, core PCE, is due to be released on Thursday and is expected to show that price pressures are at their strongest since May 2024. Such a reading could lead to volatility across assets including Treasuries and cryptocurrencies. Stay vigilant!
