1 month implied volatility of Bitcoin is trading about 110% (well, 105/115 quoted on the option chain), And I, as a volatility trader, ask myself whether this is a buy or a sell. How can one asses the risk reward trading volatility with this kind of asset? backed by nothing but expectations and herd behavior it's basically impossible to quantify risk-reward in trading it.
During my years as FX volatility trader I've traded some weird stuff, and the oddest pairs ever, but don't know how to start analyzing this as an asset. moves are pretty much random, gaping and irrational.
Are you talking about options on deribit? I don't think it is a very significant product as yet. It's a very immature product on a small exchange. Look at the open interest for these contracts. I assume you are talking about the Dec-29 expiry.
Not sure the implied vol is very meaningful and it's probably so strongly distorted by the huge premium on it.
If it wasn't for the introduction of the futures contracts on CBOE on coming Sunday and the CME the week thereafter, I would say it is a clear sell the sh!t out of it.
Maybe a bubble but god knows where it will pop... I guess in option market people are looking to buy the upside so a highly skewed smile is appropriate, though at these levels the downside look pretty scary
Sometimes I wonder if it is better to scalp bitcoin. I mean if one cannot measure the volatility or understand what backs it, it is best to just scalp the market. Has anyone ever tried btc trading scalping strategy? I would like your though on it.
I haven't followed Bitcoin recently, but in my opinion, applying efficient market theory to crypto is futile. There are lots of scams, pump & dump schemes, etc and price movements are mainly based on sentiments. I suppose historically swing trading bitcoin may have proved profitable as the price reverses every couple of weeks or so, but the likelihood of getting wiped out in a crash is also very high! Scalping should also work, but wouldn't scalping almost anything else...?