The BTC volatility index on the Deribit exchange has peaked since November 2022
A user of the platform sold bitcoin options for $75,000 and received $4.26 million
The 30-day bitcoin volatility index on the Deribit crypto exchange (DVOL) rose from 41% to 76% in a month, reaching its highest since November 2022, according to the TradingView platform. On March 5, an unknown user sold 250 call option contracts worth $75,000 with an expiration date in December, Deribit Asia Business Development officer Lin Chen told CoinDesk. The seller received a premium of $4,258 million. On Deribit, one option contract is equal to 1 BTC. "The seller probably has a large stock of BTC on hand and can directly lock in a profit from the sale price of $75,000," Chen explained.
The growth of DVOL has a positive effect on the prices of options or derivative contracts, which give the buyer the right to buy or sell the underlying asset later. A call gives the right to buy, and a put gives the right to sell. The higher the volatility, the higher the option premium.
Thus, DVOL often encourages investors to sell call options in order to earn additional income. This is one of the most popular strategies in the stock market. Call options are usually sold at prices higher than the market rate of the underlying asset.
If the price of the underlying asset exceeds the strike price, the investor must sell the shares while retaining the premium received for the sale of the call.
Overall activity on Deribit, which accounts for 85% of the global crypto options market, has increased. The total conditional open interest in the cryptocurrency futures and options segments has reached a record high of $32 billion (data from the Laevitas platform). The options segment accounts for almost $30 billion.
