The US Securities and Exchange Commission (SEC) is expected to approve a request from Asset Manager ProShare Capital Management for the Bitcoin Exchange Trading Fund (ETF) on October 18.

As previously reported by Cointelegraph, Securities and Exchange Commission Chairman Gary Gensler recently suggested that the regulator would likely approve spillover effects on Bitcoin ETF futures under the Investment Firms Act of 1940.

On October 15, Nasdaq confirmed the listing of the Valkyries Bitcoin Strategy ETF. The deadline for the SEC to formally approve Valkyrie’s ETF is October 25, but it can be extended until December 8.

The implied probability of $70,000 call options is 25%.
Two weeks ago, it was not easy to find an investor willing to bet the $70,000 bitcoin (BTC) price on October 29th. It needed 62% of a potential rally from the $43,100 price on September 30th, which seemed far-reaching at the time. Thus, $70,000 of BTC options for an October call (buy) on September 30th are trading on Deribit for $194, or 0.0045 BTC.

Bitcoin buy option price from october 29 in bitcoin. Source: Deribit
As shown above, the same option is currently trading at $1,570, or 0.0262 BTC, where Bitcoin is up 39% since the beginning of the month to $60,000. Although the $70,000 call is still a long way off, the odds are better.

Even as the price of Bitcoin is rising, the implied probability (delta) of alternatives is currently at 25%, which at first glance may appear bearish.

Traders should not take choices literally
The value of the options depends largely on how far you go. Given Bitcoin’s 4% daily fluctuation, anything can happen before the options expire on October 29. Thus, traders should not worry too much about the perceived probability (delta) of the alternatives.

To better gauge the chances of a Bitcoin ETF being approved by the end of the month, a delta of $50,000 should be used as the “base” scenario. Traders should assume that the 17% price drop is the latest sign that the SEC’s decision has been delayed or rejected.

Given that the $50,000 put option is trading at 84% delta or implied probability, investors estimate that the odds will be 16% for the doomsday scenario.

Meanwhile, the $70,000 call from October 29 at 08:00 UTC, which indicates that the ETF has been approved, has an implied probability of 25%. The options markets undoubtedly show more opportunities for a positive movement, but this is far from reality.

Source: CoinTelegraph

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