Bitcoin Options Data: SECRET Trading Tips!! šŸ¤«

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šŸ“ŗ Bitcoin Options 101 šŸ‘‰ https://www.youtube.com/watch?v=ZyjyEBOm_wA

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– TIMESTAMPS –
0:00 Intro
1:59 Options Overview
5:12 Put Call Ratio
7:41 Options Skew
11:10 Price Probabilities
13:40 Expiry Dates
18:00 Conclusion

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ā›“ļø šŸ”— Helpful Links & Sources šŸ”— ā›“ļø

ā–ŗ Skew.com: https://skew.com/
ā–ŗ Expiration Week: https://quantpedia.com/strategies/option-expiration-week-effect/
ā–ŗ Volatility Skew: https://www.thebalance.com/volatility-skew-1-2536780
ā–ŗ Skew Calculation: https://support.skew.com/hc/en-gb/articles/360016624360-How-is-25d-skew-calculated-
ā–ŗ Options Greeks: https://learn.robinhood.com/articles/3oJP2aXJ9HDFNf1E8y0qls/what-are-options-greeks/
ā–ŗ Intro to Implied Vol: https://medium.com/deribitofficial/introduction-to-options-pricing-and-implied-volatility-iv-a232d70d8fd2

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šŸ“ˆ Put-Call Ratio šŸ“ˆ

This is a measure of the ratio of the open interest or the volume of the puts vs. the calls.

It is able to give us a rough idea of general sentiment in the market. If there is more open interest outstanding for Puts than calls then that means that there are larger bearish bets than bullish bets.

A Put-Call ratio of greater than 1 is viewed as more bearish than a ratio of more than one and vice versa. You can also view the Put-Call ratio through time to get a feeling for how this broader market sentiment has changed.

You can also view the Put-Call ratio over time to get a sense of how it has moved and hence if the market has become more or less bullish.

šŸ“Š Option Skew šŸ“Š

Option skew is a measure of the relative “richness” of the put vs. the call options expressed in terms of implied volatility.

It is a measure of how much higher the implied volatility of Put option with a specific delta are to call options with the same delta – all normalised by the at-the-money volatility.

Given the direct relationship between implied volatility and option premiums, you can also view this ratio as a rough measure of how much more the cost of Puts are to Calls.

Let’s say that the 25 Delta options skew is sitting at about 20%. This basically means that the implied volatility of a put option is about 20% greater than that of a call. We can also therefor infer that the price of similar Put options are greater than the calls to a similar degree.

This therefore means that option buyers are willing to pay more to buy Put options than they are to pay for calls with exactly the same parameters. You can view it is more bearish sign. We can also say the opposite if the ratio is negative.

You can also view the option skew over time to get a sense of how market sentiment has changed over time.

šŸ’ā€ā™‚ļø Calculating Probabilty šŸ’ā€ā™‚ļø

You can use option pricing to calculate the probability of Bitcoin being above a certain price. All that we are doing here is using the market parameters of the options in order to back out the probability of it being above a chose strike price.

This is also something that you don’t have to calculate yourself. Skew.com has a graph that calculates this for us. Here you can see the probability distribution for a number of different option expiries.

These can be helpful as they can give you a more realistic view of what the price of Bitcoin is likely to look like. You don’t have to rely on the hopium smokers with their intense price predictions.

šŸ•” Option Expiries šŸ•”

There is generally a lot of volatility around the option expiry dates. This is because there are market makers that are adjusting their positions to take account of potential physical delivery.

This is something that has been well known in the stock markets with equity market volatility reaching a peak during this week. However, given the growth of the Bitcoin options markets, this happens over here as well. It is usually during the 2-3 days up till the expiry.

You can try and get a sense of whether there is going to be buying or selling pressure by taking a look at the balance of the outstanding Calls / Puts on the day of expiry. This is seen in the order books on an exchange such as Deribit.

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šŸ“œ Disclaimer šŸ“œ

The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.

#Bitcoin #Options #Trading #crypto #Markets

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