This weeks Option Flows with Tony Stewart starts with commentary of the large buyers of OTM options.
BTC+ETH rangebound while all around there’s activity.
The paradox continues to bring large buyers of OTM options, still heavily biased to upside Calls, playing for a large shift, but ATM volume and commitment lower.
Movement follows inertia, but is not caused by it.
2 / Option vol low but not cheap. 1m IV>RV; 54v29!
Attempts to break the spot range continue to be refuted. But IV has for the moment reached a plateau where large sellers refuse to push.
IV 10d 41%, 1m 54%, 3m 66%
RV 10d 27%, 1m 29%, 3m 61%
No material skew change.
End / Inexplicable wicks and historic volatility haunt sellers and tempt buyers. This is one reason why IV>RV, as large moves are feasible in BTC. But also the human element – IV would probably be lower if trading desks and risk management were non-human.
Managing risk allows sleep.
Original thread on Twitter can be seen here.
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