Deribit, the world’s largest crypto options exchange by volumes, will soon launch bitcoin (BTC) volatility futures, offering digital asset investors a simpler way to hedge against market volatility.
Futures tied to Deribit’s forward-looking bitcoin volatility index (DVOL) will be available to Deribit under the ticker BTCDVOL from the end of March. The exchange’s Chief Commercial Officer, Lars van der Velde, says:
“The DVOL futures contract is a great way for investors to protect their portfolios against sudden bitcoin price movements. We’re seeing a lot of interest in this product and we’re confident that it will be a big success.”
DVOL is a new bitcoin volatility metric that launched in early 2021. It measures bitcoin’s 30-day implied volatility calculated using Deribit’s options order book. Implied volatility refers to the options market’s expectation for price turbulence over a specific period.
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Volatility trading involves betting on the future stability of an asset instead of taking a view on the direction of future price moves. Going long or buying volatility means betting the asset will see big moves in either direction.
DVOL is a valuable new metric that launched in early 2021. It measures bitcoin’s 30-day implied volatility calculated using Deribit’s options order book. Implied volatility refers to the options market’s expectation for price turbulence over a specific period.
Volatility trading involves betting on the future stability of an asset instead of taking a view on the direction of future price moves.
Crypto traders have been using options strategies like straddle and strangle to express their views on volatility. However, these strategies are complex and require buying and selling options at various strike prices and high-risk tolerance.
With the new offering, traders can bypass complexities involved in setting up options strategies and directly buy and sell volatility similar to trading futures tied to bitcoin’s price. The product may attract more institutional and retail investors, who are looking for a less risky way to trade digital currencies.
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