Bitcoin traders on the Chicago Mercantile Exchange are buying deep, out-of-the-money put options ahead of Friday’s U.S. nonfarm payrolls (NFP) report, using inexpensive downside bets to hedge against a surprise strong jobs print that could knock risk assets lower.
Economists polled by FactSet expect the August NFP to show the economy added 110,000 jobs, up from 73,000 in July, while the unemployment rate is forecast to hold at 4.2% and hourly earnings to rise 0.3%. Yet recent data have softened: JOLTS showed job openings fell to 7.2 million in July and ADP reported just 54,000 private‑sector hires in August versus 104,000 in July.
Those softer readings support bets on Federal Reserve rate cuts — bullish for crypto — but traders are preparing for the opposite scenario. A hotter‑than‑expected payrolls print could push back rate‑cut expectations and trigger a rapid sell‑off in Bitcoin. Gabe Selby, head of research at CF Benchmarks, says demand has been especially strong for 5-delta deep OTM puts, a sign investors fear an upside NFP surprise could re-anchor Fed policy toward price stability.
Put options give holders the right to sell an asset at a set strike before expiry. 5-delta puts sit far below the market price and cost less than nearer strikes, making them popular as low‑cost “lottery ticket” hedges: cheap protection against a sharp downside move or a speculative wager on a crash.
Options activity beyond the CME also shows elevated downside concern. Deribit listings and Amberdata‑tracked risk reversals indicate short and near‑dated puts are trading at a premium to calls. On spot markets, Bitcoin changed hands around $109,950, down about 2% over 24 hours, after a recovery stalled above $112,000 and reinforced a recent August low as short‑term resistance.
What this means for traders and investors: markets are pricing asymmetric risk around the NFP. Hedging with deep OTM puts protects positions but comes at a cost if nothing dramatic occurs. Options are complex financial instruments — consider the risks and that hedges can expire worthless if the expected move fails to materialize.
Source: CoinDesk. Read the original coverage for full details.