implied volatility Archives

Bitcoin And Ethereum Options Contract Set To Expire

Global options trading service platform Greeks.live, took to X (formerly Twitter) to share data regarding the expiration of the crypto assets.

According to the platform, about 37,000 BTC options with a notional value of $1.58 billion are set to expire. In addition, Bitcoin’s current put-call ratio stands at 1.02 with a “Maxpain” point of $42,000.

Meanwhile, for Ethereum, the data shows that about 268,000 options valued at $610 million are set to expire soon. In addition, the current put-call ratio for ETH stand at 0.66, with a “maxpain” point of $2,250. The post read:

Dec. 15 Options Data. 37,000 BTC options are about to expire with a Put Call Ratio of 1.02, a Maxpain point of $42,000, and a notional value of $1.58 billion. 268,000 ETH options are due to expire with a Put Call Ratio of 0.66, a Maxpain point of $2,250, and a notional value of $610 million.

Notably, the put-call ratio, to put it simply, contrasts the trading volume of put and call options. A ratio higher than 1 signifies a higher number of puts (sell) than calls (buy) options, implying a negative outlook among traders.

Furthermore, the price at which the highest number of options would expire worthless is known as the maximum pain (Maxpain) point.

Greeks.live asserted that this week saw a decline in the market, with BTC dropping close to $40,000 at one point. As a result, many hedge their positions, which led to a greater proportion of Put than Call positions this week. The bulk of trading is still concentrated on Bitcoin options even with the decline.

The platform also highlighted that the Implied Volatility (IV) has remained quite flat for about a month now. In addition, significant option moves are still going on.

The Crypto Assets Set To See Substantial Inflow

Cryptocurrency analyst Ali has recently revealed that billions of inflow are set to be poured into Bitcoin and Ethereum. The analyst shared this crucial information with the crypto community in an X post on Thursday, December 14.

According to Ali, over $19.7 billion is about to flow into the two major players in the cryptocurrency market. He also added that this capital inflow is comparable to what we observed in December 2020.

The X post was accompanied by a chart showing a virtual explanation of a similar scenario. Ali further highlighted that after the scenario, the price of BTC moved from $18,000 to $65,000.

With billions of dollars flooding into the two major crypto, the market might be poised for further profits.

Bitcoin has sharply declined in the past month which has dragged it down to the $40K price point. The digital asset’s downtrend had then promptly dragged their metrics like implied volatility down with it. This decline has been even sharper as bears have gotten a tighter grip on the market. For some, this could be bad news. However, for others, it could mean a period of opportunity.

Bitcoin Implied Volatility Crumbles

Bitcoin’s implied volatility is a metric that is used to illustrate investor expectations of future price volatility of the digital asset going forward. This metric is not only prominent in the crypto space but is used across a number of actives to map out investor expectations over time when it comes to volatility. If this metric is high, then investors are clearly expecting price volatility to be on the high side going forward, which is why this is an important metric for investors, especially those invested for the short term.

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For bitcoin, implied volatility has been on a steady downtrend since the end of 2021. This follows the price movements which have also recorded a similar downtrend in its value. The implied volatile downtrend however ramped up even more at the beginning of this year. It is important to note that low implied volatility (IV) for bitcoin is uncharacteristic, hence why it is important.

BTC implied volatility declines | Source: Arcane Research

With such low levels, volatility bets become a more attractive venture for bitcoin where they can buy call and put options. One thing about low IV levels for bitcoin is that they tend to extend for a Lon time. An example of this is the low IV levels recorded in June 2020 that lasted for six months into December 2020.

Bitcoin’s IV is being impacted by a number of factors, including decentralized finance (DeFi) innovations that are popping up around the corner.

BTC Price Movements

Bitcoin has been moving more or less erratically over the past few months. After hitting its peak of $69K, the digital asset had gone a consistent descent that saw it lose over 30% of the all-time high value. Additionally, the digital asset high is known to be a market mover has dragged the market down with it, losing about $300 billion off its own market cap in the process.

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Bitcoin has however held strong above the $40K point. The digital asset continues to show strong support at this point, suggesting that this is the point for bulls to hold and for bears to beat.

BTC at $42K | Source: BTCUSD on TradingView.com

In the last 24 hours, the price of BTC has grown from the low $41,000 to above $42,000, adding about $1,000 to its value just as the markets begin to open for midweek trading. The price of the digital asset is currently trending at $42,300, with indicators pointing towards a retest of the $42,500 resistance point.

Featured image from Binaryx, charts from Arcane Research and TradingView.com