The cryptocurrency's price jumped to $30,800 on Wednesday, the highest since April 14, cheering the recent flurry of spot bitcoin ETF applications by BlackRock (BLK), WisdomTree and Invesco (IVZ), which highlighted a sustained institutional appetite for the world's largest cryptocurrency.

The sudden change in the market trajectory from a week ago, when prices briefly traded below a crucial support at $25,200, has traders turning to options to chase the rally.

On Wednesday, bitcoin options contracts worth $3.3 billion changed hands across major exchanges, including Deribit. That's the highest single-day notional volume in three months. Deribit accounted for over 80% of the global tally.

"We have seen the biggest trading volume in three months. There is a lot of interest in buying call options," Deribit's Asia business development personnel Lin Chen told CoinDesk.

Options give investors the right to buy or sell the underlying asset, in this case, bitcoin, at a set price at a later date. A call option buyer gets the right to buy and a put buyer gets the right to sell. Traders often buy calls as a low-cost leveraged bullish bet.

The chart shows bias for higher strike call options. (Laevitas)

Call options at strike prices of $30,000, $31,000, $32,000 and $40,000 have been popular among traders in the past 24 hours, per Laevitas.

In the past seven days, call spreads have accounted for 45% of the total block flows. Block trades are large orders executed on over-the-counter liquidity networks like Paradigm and then listed on exchanges.

Call spread strategies have been most preferred in the past seven days. (Amberdata)

According to Patrick Chu, director of institutional sales and trading at Paradigm, the price rally has forced some call overwriters to buy back the bullish exposure. Call overwriting involves selling calls against the cryptocurrency owned and is a popular strategy for generating additional yield in a flat-to-negative market.

"Mostly, people have been buying back the topside, especially option overwriters given the rapid upward move," Chu said.

DVOL spikes

The increased demand for options pushed Deribit's bitcoin volatility index, DVOL, to 59.24, the highest since early April, per Amberdata.

The DVOL measures bitcoin's 30-day implied volatility (IV) calculated using Deribit's options order book. The higher the demand for options, the higher the IV and vice versa. The IV refers to investors' expectations for price turbulence over a specific period.

"The increased demand for options has pushed up the DVOL," Deribit's Chen said.

Implied volatility usually rises during risk aversion in traditional markets. Deribit's DVOL, however, tends to rise when prices rise, Chen explained.

The DVOL has seen a notable rise in the past seven days. (Amberdata)

Bitcoin's implied volatility and spot prices have been positively correlated since the start of the year.

"The DVOL is moving reactively on the recent headlines and the last three days' spot move. Prices were very contained in the recent two months and realized volatility has been low overall. The market was caught a bit short [volatility] going in and people are scrambling to cover," Chu noted.

Bitcoin Options Markets On-chain Data

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team based in Mumbai, holds a masters degree in Finance and a Chartered Market Technician (CMT) member. Omkar previously worked at FXStreet, writing research on currency markets and as fundamental analyst at currency and commodities desk at Mumbai-based brokerage houses. Omkar holds small amounts of bitcoin, ether, BitTorrent, tron and dot.