Deribit To Launch Bitcoin Volatility Futures

Key Points:

• Deribit will launch volatile Bitcoin futures.
• The futures contracts tied to the DVOL futures would be available to Deribit under the ticker BTCDVOL from the end of March.
• The new product could attract more retail and institutional investors to join.

According to a CoinDesk report, Deribit, the largest crypto options exchange in the world by volume, will soon introduce volatile Bitcoin futures.

According to the exchange’s chief commercial officer Luuk Strijers, Deribit will be able to purchase futures contracts linked to the Deribit Bitcoin Volatility Index (DVOL) futures at the end of March under the ticker BTCDVOL.

The purpose of the measure is to give investors in digital assets easier choices to protect themselves against market volatility.

“DVOL futures is an exciting new product that will allow traders to hedge their positions and manage overall risk, taking advantage of market volatility, as well as generating alpha and multivariable This product is especially useful for those who want exposure to BTC volatility but don’t want to trade complicated options strategies,” Strijers stated.

Instead of focusing on the direction of future price movement, volatility trading includes placing bets on an asset’s continued stability in the future. To purchase or buy volatility is to wager that the asset will see significant movement in either direction.

Options trading tactics like the straddle and strangle have been used by cryptocurrency traders to communicate their opinions on volatility. These tactics call for high-risk tolerance, the purchase and sale of options at various strike prices, and are complicated.

Launching in early 2021, DVOL tracks the 30-day implied volatility of Bitcoin as determined by Deribit’s options order book.

Under the new deal, traders may immediately purchase and sell volatility comparable to futures related to the price of Bitcoin instead of having to deal with the complexity of putting up options strategies.

Similar to the VIX futures on the Chicago Options Exchange (Cboe) Volatility Index, or VIX, this product may draw in more individual and institutional investors. This indicator reflects what the market anticipates will happen to the S&P 500’s volatility over the following 30 days.

The products will be linear futures contracts, priced, margined, and settled in Circle’s USD-pegged stablecoin USDC. The return offered by linear contracts is linearly correlated to the spot cost of the underlying asset.

Users of Deribit will initially only be able to trade futures contracts with one-month expirations, but the exchange plans to expand the offer to include contracts with five-day expirations after that.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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