This weeks Option Flows with Tony Stewart starts with commentary of the weekend wicks.

August 5

The weekend wicks have taken some euphoria out of the upside, but also exhibited resilience in consolidation. Skew (deeply +ve to Calls) has understandably but only fractionally weakened with near OTM Call selling >14k, but medium/long-dated holds strong for upside exposure.

2 / Term structure in steep contango, medium-dated vols drifting, but short-dated options decaying with realised vol; 7th Aug weekly trading 20% vol discount to 1month IV. The whole curve could soften further if spot retains 10.6-12k/350-400 ranges. Above 12k/400 IV shown to firm.

End / Volumes have been very light across all time zones and exchanges since the weekend, but option OI continues to grow, with so many market participants becoming tired of inexplicable wicks leading to liquidations in spot or leveraged perp/futures. Options limit that downside.

Original thread on Twitter can be seen here.

August 6

Implied Vols softer, profit-taking + yield/vol Call sellers observed; patience tested at spot resistance.
Initially, Aug7+14 BTC 12-12.5k Calls bought on the rally, but sellers of Sep 18-20k Calls and later selling ITM Aug28 10.5+11k and OTM Aug 13-16k Calls.

12k breach tough.

2 / Long the 10.5+11k Calls avoided possible stops on spot alternatives at the weekend.

Held by a fund that bought the Calls when BTC <9.5k and IV low. Even at the top of that 9.5k possibility, on the 23rd July the Aug28 11k Calls traded at $196, traded yesterday at $1161.

Eyes 6x.

3 / While options have their obvious benefits, the theta decay is a daily hurdle for longs and a benefit for shorts. While BTC+ETH are showing resilience on every pull-back, to date, waiting to break 12k/400 with momentum is taxing and can result in Calls and vol being sold out.

End / Medium-Long term has been bereft of any material put buyers for some time, despite low skew, but short-term occasionally we see large OTM 1week put options being bought in size for small premiums. At around 11am UTC, the 14th Aug 9.5+10k puts were bought aggressively x2500.

Original thread on Twitter can be seen here.

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