In this week’s edition of Option Flows, Tony Stewart is commenting on Coinbase listing, Option volumes and BTC+ETH hitting All Time Highs.

April 13

<24hours until Coinbase.
2days of decent Option volumes. BTC+ETH hitting ATHs.
Implied Vols squeezing higher.
Fast money trading 16th April weekly expiry with decent 2-way, but tilted bullish.
Larger Fund flows firmly bullish bias; clear accumulation of Apr+May+Jun 80k Calls.

2) Note the term-structure bump in the April16th Expiry (BTC+ETH), as fast money hedges/expects/plays for Coinbase movement, while discounting overnight and the following week.
This CB effect is driven by large flows in 60k-62k Puts and 64-65k Calls, Skew tilted to Call firmness.

3) The 80k Call is the dominant upside OI Strike.

Have seen Apr30th convexity buying, with also large Funds buying and moving inventory up to the 80k strike, OI=14k.

Some buying is outright, some funded via Call Spreads (May 80k-Jun 100k, Jun80-100k), buying 80k, selling 100k.

4) On the downside, Listed Option Flows have protected less than might have expected with Spot on highs; Call skew dominates on BTC+ETH, which is supported by huge funding in perps+derivs.
The 60k strike has seen more initiated from sell-side, but active buyers keen to absorb.

5) Move higher in IVs not unexpected with Spot breaking 61k/2.2k and making ATHs.

But the Term structure remains in Contango and further dated IV has not firmed materially in BTC suggesting CB is the factor, not currently the ATH.

Note BTC 1m RV is 60%; need more to sustain IV.

View Twitter thread.

April 15

CB delay in trading stifled US hours volatility but gained huge CNBC exposure.
A safe listing forced a retrace in IV: 1w <60%, 1m 70%.

While the next few days of CB movement may be mirrored in BTC, a shift higher in RV may be required to lift IV.
ETH likely to gain attention.

2) Call selling in Apr30 72k and May7 74k has pushed BTC IV lower, as CB performed well, but not over-exuberantly.
But note also: 10d IV (62%) >10d RV (55%).

ETH hit new ATHs at 2.5k, but IV retraced too with BTC.
Note: 10d IV (66%) <10d RV (85%).

Strong ETH narrative persists.

View Twitter thread.

April 16

Complete Option flow reversal last 12hours in BTC.

Early Asian hours, BTC>63.5k, the large holder of Apr30 80k Calls added 2k. In addition, saw Apr 72k +May 75-85k Calls bought. FOMO.

On BTC retrace, Apr 68-76k Calls sold (lower volumes); also May 50-75k RR x300, Calls sold.

2)The pattern so far is clear.
Dominant large buying of upside Calls Apr-Jun 70-85k.
Some offset by initiating yield sales, particularly 100k+, but smaller clips in 68-76k region.
While 50k Puts still large OI, high delta ATM Puts sold on dips+strentgh.
Near dated sales IV>RV.

3) BTC term-structure clear Contango. 10d-1m RV 55%.

Short-dated IV pressure on gamma.

Skew chart below shows:
– 1week (yellow) fast money bearish bias (as has proved correct overnight)
– Medium-longer-term Call domination (from 80k Call + spread flows highlighted above).

View Twitter thread.


Tony Stewart Tony Stewart

ex-MS Head of Trading desk /BTC Vol. Prop trading /Option Market forensics/ Alter Ego account Digital Asset arena. Tweets are my opinion, not financial advice.