How options on the BlackRock bitcoin ETF may have worsened crypto meltdown
Record options trading on BlackRock's IBIT ETF during a bitcoin crash sparked debate over whether it was caused by a hedge fund blowup or general market panic.Summary
Options trading on BlackRock's spot bitcoin ETF, IBIT, surged to a record 2.33 million contracts on Thursday as bitcoin crashed, with put options narrowly outpacing calls, indicating a high demand for downside protection. This activity included a record $900 million in premiums paid.
One theory, popularized by analyst Parker, suggests the record activity resulted from a large hedge fund blowing up. This fund allegedly bought cheap, out-of-the-money call options using borrowed money, doubled down as the price fell, and then faced margin calls when the calls tanked, forcing them to dump IBIT shares and aggressively close/replace options, leading to the massive premium payments.
However, options expert Tony Stewart disagreed, arguing that data shows $150 million of the premium came from short put sellers buying back their positions to cut losses, and the rest was standard chaotic trading noise, concluding the hedge fund theory was inconclusive and possibly too small in size to explain the entire market move.
(Source：CoinDesk)