The number of ETH options hit a record high, and the encryption market may enter a period of high volatility
Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc), by Ashwath Balakrishnan, translated by Kyle, published with permission.
important points
Editor's Note: This article comes from
Babbitt Information (ID: bitcoin8btc)
Babbitt Information (ID: bitcoin8btc)
important points
Open interest in ETH options products hit a record high and implied volatility hit a record low.
Open interest in ETH options hit a record high as market volatility reached record lows. Market data further suggests that the current volatility trend is upward.
Source: Skew
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Open interest in ETH options hit an all-time high of nearly $200 million. Just two months ago, ETH options open interest prices breached previous highs.
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Source: Skew
This time around, however, buying options is one of the most profitable deals.
ETH implied volatility is at an all-time low, while realized volatility is hovering around yearly lows. Implied volatility is a variable determined by the Black Scholes option pricing formula, while realized volatility is the actual historical volatility.
Source: Skew
Low implied volatility suggests options are cheap. Traders take advantage of this by entering into dual-legged options trades known as straddles and strangles.
Both strategies are market neutral, meaning they profit if the price of the underlying asset breaks up or down. The ultimate goal of these strategies is to enable volatility to be tolerated over the long term.
Ethereum options are concentrated in July 31, 2020 and December expiry options. 25, 2020. The most concentrated option individual strike prices are $200, $220, $240 and $280.
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Since the end of June, the put/call ratio has been falling, evidence that flows have been steadily shifting towards calls rather than puts. This suggests that options traders believe that a rise is more likely than a fall.
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