The Rise of Put Options: A Deep Dive into Deribit’s Trading Data

04/19/2023 10:20 • Metaverse Matters • 84 views

On April 19, it was reported that according to the transaction data of Deribit, the crypto options trading platform, 65.5% of the transaction volume of Deribit’s options in the past 7 days was to buy put option, and 32.8% was to sell put option; The trading volume of call option only accounts for 2%.

Data: In recent 7 days, the trading volume of call option on Deribit platform only accounted for about 2% of the total trading volume

Looking into Deribit’s recent trading data, it is interesting to see that put options seem to be more popular than call options. In the past seven days, 65.5% of the transaction volume of options on Deribit was to buy put options, while only 2% of the volume was for call options. So why the sudden rise in popularity for put options? In this article, we will explore the reasons behind this trend and discuss its potential impact on the cryptocurrency trading market.

What are Put and Call Options?

Before we dive into the data, let’s first clarify the meaning of put and call options. In simple terms, an option is a contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specific price (called the strike price) on or before a certain date. A put option is a type of option where the holder has the right to sell the underlying asset at the strike price, while a call option is a type of option where the holder has the right to buy the underlying asset at the strike price.

The Ongoing Bitcoin Sell-Off

One possible explanation for the rise in put options could be the current sell-off in the Bitcoin market. Bitcoin, the most popular cryptocurrency, has been experiencing a downward trend in its value since mid-April. As of this writing, Bitcoin’s price is at around $49,000, a far cry from its all-time high of over $64,000 in mid-April. This downward trend could be driving investors to use put options as a hedging strategy to protect against further losses in the Bitcoin market.

The Fear of Market Volatility

Another reason why put options may be more popular these days is the general fear of market volatility. The cryptocurrency market is notoriously volatile, and investors are always on the lookout for ways to mitigate risk. Put options allow investors to limit their losses in case the market takes a sudden turn for the worse. This could explain the sudden rise in put options on Deribit.

Is Deribit’s Data Representative?

It’s also worth noting that Deribit is just one of many cryptocurrency options trading platforms out there. While their data provides an intriguing glimpse into recent trading trends, it’s possible that other platforms could be seeing a different pattern. Deribit is known for its large institutional client base, so it’s possible that the rise in put options is a reflection of their risk management strategies.

The Future of Cryptocurrency Options Trading

So what does all of this mean for the future of cryptocurrency options trading? While it’s difficult to say for sure, it’s clear that put options are on the rise. This could lead to increased competition among trading platforms and more sophisticated hedging strategies for investors. It’s also possible that more institutional investors will enter the market, drawn by the potential for risk management and profit in a highly volatile market.

Conclusion

In conclusion, Deribit’s recent trading data shows that put options are increasingly popular among investors. This could be due to a combination of factors, including the ongoing Bitcoin sell-off and the general fear of market volatility. While we can’t predict the future of cryptocurrency options trading, it’s clear that put options are here to stay.

FAQs:

Q: What is a put option?
A: A put option is a type of option where the holder has the right to sell the underlying asset at the strike price.
Q: Why are put options on the rise?
A: There are several possible explanations, including the current sell-off in the Bitcoin market and the general fear of market volatility.
Q: Will this trend continue?
A: It’s difficult to say for sure, but it’s clear that put options are becoming more popular among investors.

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