In this week's recap, Imran Lakha of Options Insight provides the latest insights into BTC and ETH derivatives markets. Explore trends in volatility, term structures, and much more to stay informed on crypto options trading.
We're back this week with Imran Lakha walking us through some key points in the crypto options market.
Crypto realized vol has been stable around 30-40 this week despite spot trading back towards the highs.
Implied vol exploding higher in the front end due to anticipation of the election move. Implied move looking to be around 7% right now.
Carry is massively positive due to the expected moves so a big vol reset is to be expected post the event.
The OHLC charts show that BTC has tested the upper bands whilst the move in ETH is more orderly.
Trump seems to be going strong after his recent media appearances, so the crypto market doesn't want to wait any longer.
Skew term structures are little changed, but if anything, they are losing some call skew in 08Nov as the bullish move appears to be getting somewhat priced in before the event.
Longer dated call skew is stable at around 4 vols and suggest a bullish medium term outlook into next year.
Another $1Bn ETF inflows into BTC ETFs, and short getting liquidated in futures is fuelling this rally but still the upside bid looks quite tame. This suggests people are higher conviction buyers of spot rather than speculative buyers of calls.
ETH/BTC spot lurched lower again down to 0,036 and shows little sign of bouncing as BTC drives the strength into the US election
ETH vol lost some ground in 2024 expires as BTC call buyers were active to chase the break higher. ETH has given traders little reason to get excited.
We would wait for the election outcome to play out before considering a catch-up play in ETH.
The relative skew term structure has steepened showing less upside demand for ETH in the near term but a slight premium above BTC upside in the back end still.
Crypto markets are seeing steady realized volatility, but implied volatility has spiked ahead of the U.S. election, with the front end showing a significant 20-point premium. Bitcoin is leading the rally as demand shifts towards spot exposure rather than speculative calls, while Ethereum lags slightly. Post-election, we expect a reset in front-end volatility, potentially opening up lower-volatility trading opportunities.