The idea of a Bitcoin option with a strike price of $100,000 may sound absurd at first glance—especially when Bitcoin is trading significantly below that level. Yet, such contracts are not only real but actively traded, drawing interest from both speculative investors and sophisticated traders. On December 17, 2020, Deribit launched a call option set to expire on September 24, 2021, with a strike price of $100,000. Within just five days, the contract had already seen a total trading volume of $253,000, including one massive trade involving 81.6 contracts valued at over $80,000.
This single large transaction meant that a buyer paid approximately $80,600 for the right—but not the obligation—to purchase 81.6 Bitcoins at $100,000 each by the expiration date. Of course, the buyer could later sell this right in the market or simply let it expire worthless if the price of Bitcoin fails to reach that level.
Understanding Deep Out-of-the-Money Options
Options like this are known as deep out-of-the-money (OTM) call options, where the strike price is far above the current market price of the underlying asset—in this case, Bitcoin. Traditional financial theory often views such instruments as low-probability bets with minimal intrinsic value. However, in the world of digital assets, these contracts serve multiple strategic purposes beyond simple speculation.
Despite their speculative nature, these high-strike options have gained notable traction. As of December 21, 2020, there were 61 recorded trades for the $100,000 call option. While smaller trades (under five contracts) accounted for 74% of total transactions by count, larger trades dominated in terms of volume. Specifically:
- Trades above 10 contracts made up only 8 transactions but contributed 60.73% of total trading volume.
- When considering all trades above five contracts as "large," they collectively represented 85% of total volume.
This pattern suggests that while many retail participants are placing small speculative bets, institutional or high-net-worth traders are driving most of the liquidity and interest.
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Market Demand and Relative Pricing
Interestingly, despite its remote likelihood of payoff, the $100,000 strike option ranked eighth in open interest among all September 24 expiry contracts—outperforming more realistic strike prices like $48,000 and $64,000. This indicates strong market sentiment and a belief in long-term bullish momentum.
At the time, the asking price for the $100,000 call was around **0.043 BTC per contract (approximately $1,100)**—significantly cheaper than the $32,000 strike call, which traded above $5,600. The low premium reflects the market’s consensus on probability: while reaching $100,000 isn't expected soon, it's no longer considered impossible.
All existing trades for this contract are calls, with zero put options traded—further underscoring overwhelming bullish sentiment across the derivatives market.
Why Trade an Unlikely Outcome?
So why would anyone buy or sell such a contract? The answer lies in understanding both risk-reward asymmetry and hedging strategies.
For Sellers: Collecting Premium with Risk Mitigation
Sellers (writers) of deep OTM calls can benefit from collecting premium income while managing exposure through hedging. A common strategy involves:
- Selling a $100,000 call option
- Holding physical Bitcoin (long spot position)
This creates a covered call strategy. If Bitcoin reaches $100,000 by expiry:
- The seller delivers BTC at $100K and earns the premium plus gains from spot appreciation.
If Bitcoin remains below $100,000:
- The option expires worthless.
- The seller keeps the full premium as profit—effectively enhancing returns.
Even in a bear market, as long as the option expires OTM, the seller retains the premium, which can offset minor declines in spot value.
For Buyers: Asymmetric Upside with Limited Downside
Buyers pay a small premium for potentially massive leverage. With Bitcoin priced around $20,000 at the time, a move to $100,000 represents a 5x return. Owning a call option amplifies this further.
Key advantages for buyers:
- Limited risk: Maximum loss is the premium paid (~$1,100 per contract).
- High time value: These options have low Greeks (sensitivity measures), meaning slower time decay relative to near-the-money options.
- Speculative leverage: No need to buy BTC outright; control large notional exposure with minimal capital.
Additionally, traders can use such options as part of broader portfolio strategies—pairing them with put options for hedging or combining them with futures for directional plays.
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FAQ: Common Questions About High-Strike Bitcoin Options
Q: What is a deep out-of-the-money (OTM) call option?
A: It’s an option contract where the strike price is significantly higher than the current market price. For example, a $100,000 Bitcoin call when BTC trades at $20,000 has no intrinsic value—its price reflects only time value and volatility expectations.
Q: Why would anyone buy a $100,000 Bitcoin call if it’s unlikely to pay off?
A: Because of asymmetric risk-reward. Buyers risk a small premium for potentially enormous returns if Bitcoin surges. It's similar to buying lottery tickets—but backed by macro trends like monetary inflation and institutional adoption.
Q: Isn’t selling these options extremely risky due to unlimited upside?
A: Yes—naked call writing carries theoretically unlimited risk. However, most professional sellers hedge their positions by holding Bitcoin (covered calls) or using other derivatives to limit exposure.
Q: How does implied volatility affect these options?
A: At the time, implied volatility was around 100.6%, indicating high uncertainty and demand for options. Higher volatility increases option premiums, benefiting sellers but also raising potential profits for buyers if volatility spikes further.
Q: Are these trades purely speculative?
A: Not necessarily. They can be used for portfolio hedging, tail-risk protection (betting on black swan rallies), or expressing macro views on monetary policy and digital scarcity.
Q: Can retail investors participate meaningfully?
A: Yes. With contracts priced around $1,100 each, even small investors can gain exposure to extreme upside scenarios without committing large capital.
Strategic Insights from Market Behavior
According to Lin, Asia Business Lead at Deribit, digital asset markets differ from traditional ones in their appetite for deep OTM calls:
“In crypto markets, there’s a large base of long-term bullish speculators. While deep OTM options pose challenges for market makers due to liquidity risks and potential insurance fund draws upon payout, they also create unique opportunities for informed traders.”
Exchanges like Deribit manage these risks through robust risk engines and margin systems. High-margin requirements ensure sellers maintain sufficient collateral—even for remote tail events.
Moreover, the popularity of such contracts signals growing maturity in crypto derivatives. Traders aren’t just betting on short-term moves—they’re building structured views on multi-year price trajectories.
Conclusion: Not Gambling—But Calculated Speculation
The existence and activity around $100,000 Bitcoin options reflect more than hype—it shows evolving sophistication in how investors use derivatives. Whether used for leverage, hedging, or expressing macro convictions, these instruments offer tools for both risk management and opportunity capture.
As Bitcoin continues gaining recognition as digital gold and an inflation hedge, extreme strike prices once deemed impossible become plausible targets. In this context, trading a $100K call isn't reckless gambling—it's forward-looking strategy based on structural shifts in finance.
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