During Thursday’s U.S. trading hours, some traders made purchases of bitcoin calls at $45,000 and $46,000 strikes, as reported by Paradigm, an over-the-counter institutional cryptocurrency trading network.

Currently, Bitcoin ($BTC) options are perceived as inexpensive, leading certain traders to capitalize on the situation by increasing bullish bets. Options, essentially derivative contracts, grant the buyer the right to buy or sell the underlying asset at a predetermined price on a later date. A call provides the right to buy, enabling traders to benefit from or hedge against upward price movements, while a put option serves the opposite purpose.

Traders gauge options as cost-effective when implied volatility, a crucial factor in options pricing, falls below its long-term average or the realized volatility of the asset. Implied volatility represents the expected one standard deviation range of the underlying asset’s price movement over a year and tends to revert to the mean. Realized volatility, on the other hand, reflects the price movements that have already occurred.

Bitcoin’s implied volatility (IV) surged with the introduction of spot ETFs in the U.S. last week but has now dipped below realized volatility. This has stimulated interest in calls at the $45,000 and $46,000 strikes during Thursday’s North American trading hours, according to Paradigm.

Paradigm observed, “We saw a large buyer of Feb $44k straddles and some outright call buying in the $45k /$46k strikes.” The term “outright call buying” suggests that the purchased calls were likely standalone trades, indicating a bet on renewed upward price volatility in bitcoin rather than part of a complex strategy. Since early 2023, bitcoin’s price and implied volatility have generally shown a positive correlation.

A “straddle” is a strategy that doesn’t depend on market direction, involving the simultaneous purchase of call and put options at the same strike price. Its aim is to profit from an anticipated surge in implied volatility and the consequent increase in options prices.

Bitcoin has experienced a drop of over 15% since the ETF debut on January 11, with prices briefly falling below $41,000 late Thursday.