Reading BTC and ETH Volatility Curves, Skew, and Gamma Spreads
Summary
The recap compares Bitcoin and Ethereum options markets through realized and implied volatility, term structures, skew, and relative gamma pricing. It describes BTC shifting into contango as front-end implied volatility falls more sharply than longer-dated volatility, while ETH’s curve remains flatter. ETH realized volatility has retreated from its peak but remains above implied volatility in the account presented, whereas BTC retains slight positive carry.
The article also discusses short-term put demand, longer-dated call interest, and a widening premium for ETH front-end gamma over BTC. It interprets these patterns as evidence of near-term caution alongside longer-term optimism about ETH. Its outlook anticipates possible volatility normalization if ETH stabilizes, but these are market views rather than tested trading rules. The recap gives no methodology for deriving forecasts, position sizing, transaction costs, or risk controls, so the quoted market levels and expectations should be treated as time-specific commentary rather than durable signals.
Key ideas
- BTC’s curve moved from mild inversion into contango as near-term volatility declined more sharply than back-end volatility.
- ETH’s volatility curve is described as flatter, with realized volatility falling from recent extremes.
- Short-dated ETH options show put demand, while longer-dated skew favors calls.
- ETH front-end gamma carries a larger volatility premium than BTC in the reported snapshot.
- The outlook links potential volatility compression to ETH price stabilization, but offers no tested trading rules.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.