ETH Options Market Volatility: A Rollercoaster Ride
Last week’s volatility in the derivatives market showcased the rapid shifts in trader sentiment.
Key Events:
- Aug 22: Initially, there was an upside bias with a focus on calls, resulting in a 1-week skew at -7%.
- Aug 25: The sentiment shifted towards defense as demand for puts increased, leading to a 1-week skew at +4%.
- Aug 28: The market returned to a neutral position, with skews leveling across different time frames.
Traders swiftly transitioned the pricing of ETH risk from bullish to bearish and then to a balanced state within a week, emphasizing the current fragile nature of market conviction.
Option markets act as a compass in such volatile environments, indicating not where the price currently stands, but rather where traders fear it might head next.
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