Crypto Option Flows as Signals of Hedging and Skew

Summary

This weekly flow note describes BTC and ETH options activity amid falling trading volume and implied volatility. It reports persistent put skew after renewed China-related concerns, with put buying concentrated in short-dated BTC contracts at lower strikes. Call sales appeared during rallies above the level cited in the note, while selling higher-strike calls alongside put demand contributed to firmer skew. The author also observes late-session implied volatility buying or covering, interpreted as gamma hedging against bearish exposure or a possible spot spike.

For ETH, the note says flows were similar but comparatively more protective than speculative, with put strikes nearer spot in percentage terms. It discusses put spreads as a potentially more efficient hedge unless traders are concerned about a deeper decline, and notes backwardated term structure and high realized-volatility readings. This is a brief interpretation of one week's flow rather than a systematic study; it supplies no full dataset, quantified trade outcomes, or rules for sizing and timing positions.

Key ideas

• Put demand and firm put skew reflected downside concerns during the reported week.
• BTC call sales were observed during rallies, alongside short-dated put activity at lower strikes.
• The author interprets late-session volatility buying as gamma hedging or protection against a spot jump.
• ETH options showed similar skew dynamics, with relatively more protective put demand.
• Put spreads were presented as an efficient hedge except for scenarios involving a deeper decline.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.