The world-leading exchange for crypto options by transactions’ volume is set to introduce futures linked to its bitcoin volatility index (DVOL).
The exchange is set to introduce the futures by March 31. The offer is set to avail a simplified alternative that digital asset investors from options they could hedge against the volatility witnessed in the market.
Bitcoin Volatility Futures to Avert Price Turbulence Losses
The futures launching on the Deribit exchange would retain ties to the forward-oriented bitcoin volatility index. Investors can access them via the ticker BTCDVOL at the onset of April.
Deribit commercial executives indicated that the BTCDVOL would enable investors to overcome the price turbulence losses. Since its launch in early 2021, the exchange tracks the monthly implied volatility by relying upon the options order book. He added that implied volatility involves that implied volatility constitutes the expectation of the options’ market for the price turbulence to prevail for a defined period.
Assets Stability Priorities Over Price Movement
Volatility trading features placing bets on the asset’s stability in the future rather than forecasting the price movement in the future. Buying volatility implies placing bets on the asset experiencing huge movement in either direction.
The commercial executive at Deribit revealed that crypto traders often rely upon options strategies such as strangle and straddle, portraying their perspective on the volatility. Nevertheless, the strategies often become complex. Additionally, the strategies feature purchasing and acquiring options at varying strike prices and are vulnerable to high-risk tolerance.
Also read:Bypassing Complexities in Bitcoin Volatility
The new offering through Bitcoin volatility futures will facilitate bypassing complexities when setting up the options strategies. The traders would directly engage with trading the futures linked to the bitcoin price level.
Strijers observed that the new offering could attract additional participation of retail and institutional participation similar to the Chicago Board Options Exchange’s (Cboe) VIX futures. The executive added that such products are considered derivatives founded upon the Cboe Volatility Index (VIX).
Strijers perceives the index as representing the 30-day volatility anticipated by the market within the S&P 500.
The head of commercial activities portrayed DVOL futures as an exciting product allowing the participating traders to hedge positions. In addition, it allows the traders to benefit from the market volatility without compromising general risk management.
Facilitated Portfolio Diversification
Strijers lauded the DVOL futures as facilitating portfolio diversification. The capability to gain advantages of alpha generation. The official revealed that DVOL is a favorite product for individuals seeking exposure to the BTC volatility while avoiding trading in options strategies engulfed in complexity.
Deribit exchange reveals plans to enable users to access the 30-day expiry futures with plans to expand the product to five-month expiries.
The product offering will feature linear-oriented futures that retain margin, settlement, and pricing through the Circle’s USDC stablecoin. Linear contracts prioritize offering payoffs linked to underlying assets’ prevailing spot exchange level.
As leveraged products, traders should consider DVOL futures similar to derivatives capable of amplifying losses and gains.
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