Near-Term Bullish SentimentAug 19, 2021
There’s been a spike in demand for near-term options as BTC and ETH obliterated their multi-month price ranges. Both assets seem to be in a strong uptrend, and speculators have been buying short-term options to capitalize on this.
Implied volatility for short-term contracts have rocketed throughout this move, with ETH and BTC 1 week contracts now sitting at an IV of 115% and 95% respectively. Implied volatility has run up faster than realized volatility, which means the options market is starting to price in more volatility.
So while market participants are turning bullish, there’s still risk of a short-term drawdown as implied by options being priced with more volatility.