Compression Then Volatility

Compression.The longer this choppy price action persists, the tighter this range will become, which makes a meaningful break outside of it in the not-so-distant future all the more likely.From an options perspective, the longer price compresses in this fashion, the cheaper it will become to buy contracts in both directions. This is because their pricing is a reflection of where price has been in the most recent past, not necessarily where it’s likely to go in the future, which creates opportunities for those who feel they have an edge on which way the range will break as we move into the second half of 2024. Think of this the same way we mentioned the recent rush for puts.The price for BTC puts a week and a half ago surged after the selloff happened. And there was also March, when demand for BTC calls went parabolic after we breach $60,000. Not before.The move happens first, then the rushed demand happens second.This allows those who are able to successfully front-run the expansion in volatility to profit when price and IV move in tandem.Compression.The longer this choppy price action persists, the tighter this range will become, which makes a meaningful break outside of it in the not-so-distant future all the more likely.From an options perspective, the longer price compresses in this fashion, the cheaper it will become to buy contracts in both directions. This is because their pricing is a reflection of where price has been in the most recent past, not necessarily where it’s likely to go in the future, which creates opportunities for those who feel they have an edge on which way the range will break as we move into the second half of 2024. Think of this the same way we mentioned the recent rush for puts.The price for BTC puts a week and a half ago surged after the selloff happened. And there was also March, when demand for BTC calls went parabolic after we breach $60,000. Not before.The move happens first, then the rushed demand happens second.This allows those who are able to successfully front-run the expansion in volatility to profit when price and IV move in tandem.

If we start to see these dots shift to predominantly red or green in the coming days, the probability of a heightened volatility move out of range will begin to ramp up.

Such a move could happen as soon as the next CPI print on May 15. If not, we might have to wait until we get closer to the end of Q2 in June, when the whopping 72,000+ BTC ($4.7 billion) worth of notional value currently attached to that expiry enters into focus.

This is because their pricing is a reflection of where price has been in the most recent past, not necessarily where it’s likely to go in the future, which creates opportunities for those who feel they have an edge on which way the range will break as we move into the second half of 2024. This is because their pricing is a reflection of where price has been in the most recent past, not necessarily where it’s likely to go in the future, which creates opportunities for those who feel they have an edge on which way the range will break as we move into the second half of 2024.

The longer this choppy price action persists, the tighter this range will become, which makes a meaningful break outside of it in the not-so-distant future all the more likely.

This is because their pricing is a reflection of where price has been in the most recent past, not necessarily where it’s likely to go in the future, which creates opportunities for those who feel they have an edge on which way the range will break as we move into the second half of 2024.

The price for BTC puts a week and a half ago surged after the selloff happened.

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