Put options or bearish bets tied to bitcoin (BTC) are trading at a discount to historical standards, offering a rare opportunity for bulls to snap up downside hedges at cheap valuations.

The conclusion is based on the ratio between two metrics – implied volatility for 25-delta out-of-the-money (OTM) BTC put options and the 30-day implied volatility (IV) of at-the-money (ATM) options. The ratio has dipped below 1.00, according to data provided by Amberdata.

It’s a sign that 25-delta put options listed at strikes below bitcoin’s current market price are undervalued in volatility terms relative to those at strikes near the spot price.

Implied volatility, traders’ collective expression of expected price turbulence, reflects demand for options. Professional traders often quote and compare options’ valuations in implied volatility terms.

A put option gives the purchaser the right but not the obligation to sell the underlying asset at a predetermined price on or before a specific date. A put buyer is implicitly bearish on the market, while a call buyer is bullish. Traders with bullish exposure in the spot/futures market often buy puts as a hedge against potential price correction.

The latest discount comes as traders scramble to add bullish exposure through calls amid bitcoin’s price rally. The cryptocurrency topped the $36,000 mark early today, extending October’s 28% gain.

That said, the window of opportunity to buy cheap hedges could be short-lived, as puts have rarely traded at a discount since early 2022.

“Put IV seldom dips below ATM IV, let alone for extended periods. Despite the current bullish market sentiment and reduced demand for downside protection, it’s difficult to imagine a scenario where BTC puts consistently maintain a discount relative to ATM volatility,” Chepal told CoinDesk.

“This prompts us to question whether this phenomenon will persist in the weeks to come," Chepal added.