December 16, 2023
Paradigm TBP Episode | BTC Options Pricing in ETF Fireworks With Amberdata Co-Host, Greg Magadini, Director of Derivatives at Amberdata on December 13th, 2023
In this episode, we dive into the $BTC ETF narrative, BTC term structure and skew dynamics, and Bybit's new structured product offering! To conclude, Joe Kruy touches on the evolution of interdealer flows on Paradigm.
Overview of Notional Volumes and Products
In the TBP Paradigm Episode, Jerry Li, Product Manager at Bybit discussed the impressive notional volumes on the structured products such as 'Dual Asset' ranging up to $100 million on a good month. The conversation dived into three key products: Dual Asset, Double-Win with an Early Redemption iteration, and Discount Buy.
Double-Win Product and Early Redemption Iteration
The Double-Win product, designed for news day trading scenarios, operates akin to a straddle. Users select an underlying asset and set a Double Wing range, potentially gaining leverage returns if the settlement moves beyond that range. A recent iteration introduced Early Redemption, allowing clients to redeem assets at any time, enhancing flexibility and risk mitigation. Jerry highlighted the popularity during significant events such as interest rate decisions by entities like the Federal Reserve. The product's unique feature of allowing redemption before expiration, even in unfavorable scenarios, makes it appealing to traders.
Introduction of Discount Buy
A recently launched product, Discount Buy, is a knockout option structure enabling users to accumulate or buy Bitcoins and Ethereum at a lower price. If the settlement price stays above the knockout level, investors receive their investment back with a 20% APR. Falling below the knockout level allows users to purchase the asset at a lower price, facilitating immediate profit.
Educational Initiatives and Retail Crypto Options Trading
The discussion touched upon the challenges of educating retail clients about complex products. Paradigm employs various strategies, including events, informative articles, and Twitter spaces with market makers, to enhance understanding and promote the adoption of structured products in the retail crypto options trading space.
Paradigm's Inter-Dealer Metric Analysis
The episode included an analysis of Paradigm's inter-dealer metric, revealing a decline in inter-dealer flows. This shift suggests a potential influx of organic client interest. The hosts explored the implications of this change, mentioning the turnover in the market-making landscape within the crypto options market.
Importance of New Money in Crypto Options
The hosts discussed the importance of new money entering the crypto options space, creating market inefficiencies and opportunities for traders. They expressed interest in having Jerry back on the podcast for future updates on Paradigm's products and market developments.
This executive summary provides an in-depth overview of the TBP Paradigm Episode, covering technical details and key insights into Paradigm's structured products and the evolving landscape of the crypto options market.
View Paradigm's YouTube channel here.
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