Hey traders,

Today, we're delving into the world of Bitcoin ETFs and the listing of options on these innovative financial instruments.

Let's jump right in.

Just recently, options were listed on Bitcoin ETFs, starting with IBIT. It's only a matter of time before we see a range of bitcoin ETF options available.

Currently, we have just one day of data on implied volatility at 58. This is where my access to market analytics, through Amberdata Pro, comes into play.

With their Deval snapshot, I can assess where the implied volatility stands in the Bitcoin ETF space and the larger Bitcoin market.

Historically, we're sitting at a point of relatively low implied volatility.

When it dips into the low 50s or below, it's an opportune moment to purchase Bitcoin options.

In contrast, when it climbs to the 70s or 80s, positions might be reconsidered.

Currently, we're at a midpoint, offering a balanced buying opportunity.

Today marks the first trading day for IBIT, and it has already seen a transactional volume of 85,000 contracts in just over an hour.

The call-put ratio is noteworthy, with 75,000 calls to 10,000 puts, indicating a significant skew in order flow.

The most active option is the December 65 call, with further action on the 55s and 60s going into January.

Trades reveal a likely diagonal spread strategy, buying January 55 calls and selling the 65s in the same month.

Large block trades support this, showing robust interest in these positions.

Despite the frothy buying, implied volatility remains poised for potential elevation.

As realized volatility shows significant movement, trading strategies are matched accordingly.

Options term structures indicate cheaper options in December, progressively rising as we advance.

For a bullish stance, purchase near-the-money options and sell out-of-the-money calls to capitalize on the implied volatility curve.

On the bear side, enter with the opposite approach. Personally, I refrain from selling if implied volatility remains below 65 and become a buyer under 50.

With implied volatilities around 55 to 60, I focus on strategic spreads.

Bitcoin ETFs entering the markets is significant. It underscores Bitcoin's integration into mainstream financial avenues.

So gear up and prepare to engage with these options.

I invite you to join Andrew tomorrow at 1PM EST for insights on his Zero Theta strategy, and how the Ukraine/Russia situation is creating a Zero Theta opprtunity in Oil.

Don't miss it; the link is RIGHT HERE.

 

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