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Paradigm TBP Episode | Volatility, ETFs, and Strategic Insights with Co-Host, Greg Magadini, Director of Derivatives on September 4th, 2023

In this podcast episode, we explore key insights in the world of vol. Starting with the breakdown of the ETH Dvol Index, the video dives into the correlation between spot prices and volatility, the intriguing dynamics of the Butterfly Index, and the implications of spikes in the market. The discussion extends to portfolio management strategies using volatility spikes, followed by an analysis of the relationship between VIX lows and crypto volatility. We wrap up with speculations about the effects on Deribit Options in the event of ETF approval and the intricacies of the convergence trade. This is not one you want to miss.


Today, we unravel the intricacies of the crypto derivative landscape, offering a detailed exploration of market dynamics, volatility relationships, and the pivotal role of a potential spot ETF approval. This technical analysis is essential for traders and investors seeking a nuanced understanding of the crypto market.

Marty's Crypto Journey

Our journey begins by tracing Marty's evolution in the crypto space. Starting with spot buying, he quickly transitioned into directional trading and eventually ventured into options and volatility trading. These phases offer critical insights into the complexity and opportunities within the crypto derivatives ecosystem. Marty underscores the importance of continuous learning, using both successful and unsuccessful trades as valuable lessons.

ETH Dvol Index Breakdown

To dive deeper into technical aspects, Greg introduces the Ethereum (ETH) Dvol Index breakdown. This index is instrumental in comprehending volatility dynamics. Greg emphasizes the shifting volatility patterns between Ethereum and Bitcoin, particularly during market fluctuations. Advanced concepts like the Butterfly Index are unveiled, which allow traders to capitalize on these dynamics, particularly within the Ethereum options market.

Market Challenges and Regulatory Impact

Marty and Greg engage in an in-depth discussion about the challenges faced by volatility traders. They explore how significant news events, such as developments at Grayscale and regulatory actions by the SEC, impact market volatility and dynamics. Marty stresses the urgent need for clear regulatory guidance, especially given the potential approval of a crypto spot ETF. Such approval could fundamentally reshape the market, necessitating a deep understanding of its potential impacts.

Spot ETF's Implications on Derivatives

The conversation shifts towards the potential implications of a spot ETF approval on crypto options platforms, like Deribit. Marty and Greg investigate the bifurcation between institutional and retail participation in the market. They highlight how spot ETF options could make crypto trading more accessible to a broader audience. Furthermore, they analyze the growth potential of the crypto options market, uncovering new trading opportunities that may emerge with the introduction of a spot ETF.

Convergence Trade Strategy

In the closing stages of our analysis, Marty introduces a convergence trade strategy intricately tied to the Grayscale GBTC discount. This advanced strategy allows traders to position themselves to benefit from the potential approval of a spot ETF. By buying the discounted Grayscale ETF and selling BITO against it, traders can harness the convergence of these two sides of the trade, capitalizing on market dynamics created by ETF approval.

Technical Insights

Throughout this summary, we've offered a detailed examination of various technical aspects, providing a comprehensive understanding of the crypto derivatives market:

  1. Volatility Indices: We've deep-dived into volatility indices, such as the ETH Dvol Index and the Butterfly Index, offering traders a granular view of volatility dynamics within the crypto market.

  2. Correlation Patterns: The intricate relationship between Ethereum and Bitcoin, especially during market shifts, has been meticulously explored, enabling traders to make informed decisions.

  3. Crypto Options Strategies: Various options strategies have been dissected, helping traders understand how to optimize their positions in response to changing market conditions.

  4. Regulatory Landscape: Our analysis has shed light on the complex regulatory environment, underlining its potential impact on market behavior.


In this TBP episode, we provided an in-depth exploration of the crypto derivative market's technical intricacies. From Marty's journey through different trading phases to the advanced strategies and the potential impact of a spot ETF, we've equipped traders and investors with the knowledge and insights needed to navigate this dynamic landscape effectively.

Armed with these technical details, market participants can make informed decisions, manage risk, and seize opportunities in the ever-evolving crypto derivatives market.

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