A month ago, one would be hard pressed to find any investor who would have expected a $32,000 Bitcoin (BTC) price for January. At the time, a 140% upside was needed from the $13,300 price on Oct. 30 and this seemed quite far fetched. 

Therefore, the January $32,000 BTC call (buy) options traded at Deribit for a meager $67, or 0.005 BTC in late October.

BTC $32,000 Jan. 2021 call option, in BTC. Source: Deribit

Fast forward to now, and the same call option peaked at $705. That’s an almost 10x gain in less than four weeks. Keep in mind that despite the rally to $19,484, an additional 67% upside is still needed to reach $32,000.

BTC Jan. 2021 call option market. Source: Deribit

Albeit the recent BTC price increase, the implied options probability (delta) currently sits at 11%. That call option price has also increased due to the BTC volatility change as sellers will request a more substantial premium for taking the risk during uncertain markets.

Intense price swings, regardless of the direction, will push volatility higher and any unexpected newsflow usually drives the indicator upwards.

Bitcoin 3-month options implied volatility. Source: Skew

Take notice of how BTC volatility spiked from 57% on 30 Oct. to 78% this week. This event is notably bullish for call option buyers. Even if the BTC price had stayed the same, the option price would have climbed accordingly.

Ledger hardware wallets 40% off

Don’t take options probabilities literally

Options pricing is also heavily dependent on how distant the expiry date is. This same $32,000 call might be deemed worthless two days ahead of maturity. Therefore, traders should not fixate too much on implied options probability (delta).

BTC Dec. 2020 call option market. Source: Deribit

By looking at call (buy) options for Dec. 25, an investor might infer that the 26% odds for $20,000 seems dim. After all, an 18% pump in a month seems unreasonable. Traders tend to have a short-term memory, but an 18% increase in 30 days happened in 9 out of the past 12 months.

Bitcoin price (USD) at Bitstamp. Source: TradingView

The last time an 18% or even larger monthly pump happened was not so long ago. On Aug. 23 Bitcoin closed at $11,645, which was a 22% increase from the previous month.

Traders and investors should consider buying call options with longer expiry dates. Those who were brave enough to bet on the 150% BTC price increase a month ago are extremely satisfied with the results.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.