How Do Cryptocurrency Price Fluctuations Affect the Moneyness of Bitcoin Options?

The high volatility of cryptocurrencies like Bitcoin causes the moneyness of their options to change rapidly. A Bitcoin option that is out-of-the-money can quickly become in-the-money, and vice-versa, due to large price swings.

This volatility increases the time value component of the option's premium, making even OTM options relatively expensive. Traders must constantly monitor their positions as a sudden price movement can dramatically alter an option's profitability and risk profile.