Deribit to Launch Futures Contracts for Bitcoin Volatility Trading

by Arnab Shome
  • The contracts will be initially available with one expiry.
  • It will be based on the Deribit Bitcoin Volatility Index (DVOL).
bitcoin crypto industry

Deribit, a major crypto options trading platform, will launch futures contracts to facilitate Bitcoin volatility trading, the exchange announced. It will be the first such crypto derivatives instrument in the market and will be priced, margined, and settled in USDC.

Deribit to Offer BTC Volatility Contracts

The BTC DVOL futures will be based on the Deribit Bitcoin Volatility Index (DVOL), a parameter that measures the volatility of the cryptocurrency across markets. It is calculated by implied volatility with a selection of option expiries and strikes on Deribit and provides a 30-day outlook on the expectation of annualized volatility.

The new contract will debut with one expiry and will be available on Deribit as of 27 March 2023. Additionally, the exchange has plans to launch additional expiries in the coming months.

“DVOL can indicate changes in the health and direction of the Bitcoin market, making it an essential tool for traders looking to stay ahead of the curve and a great baseline for volatility trading,” said the CEO of Deribit, John Jansen.

Deribit is among the top cryptocurrency derivatives exchanges, which handled more than $1.4 billion worth of derivatives contracts in the last 24 hours, according to Coinmarketcap. When it comes to cryptocurrency options, the platform dominates, capturing most of the Bitcoin and Ether options markets. It also offers cryptocurrency futures instruments.

“BTC DVOL futures are an exciting new product that will help traders to hedge their positions and take advantage of market volatility while also serving as a tool for additional risk management, alpha generation, and portfolio diversification,” Jansen added. “This product is particularly useful for those who want exposure to volatility but do not want to trade complex options strategies.”

Timing the Market

Deribit is launching the new product when the cryptocurrency market has gained a strong upward momentum following a crisis in the American banking industry. Moreover, two US banks, Signature Bank and Silicon Valley Bank, went under Federal Deposit Insurance Corporation receivership, while another, Silvergate Bank, declared voluntary liquidation.

Bitcoin gained about 36 percent in the last seven days and is trading above $27,000 as of press time. Other major cryptocurrencies, including Ether, BNB, Polygon, and many others, also gained similarly in the recent bull run.

“Having DVOL futures available makes running a portfolio of BTC options even more manageable,” said Greg Magadini, the Director of Derivatives at Amberdata. “Just like traditional PMs will sell an S&P500 future to hedge their stock holdings, Deribit traders can now granularly manage their Vega exposure by trading a liquid DVOL future against their option book. Speculators can also have clean Vega bets by trading DVOL futures while avoiding the complexities of path dependency.”

Deribit, a major crypto options trading platform, will launch futures contracts to facilitate Bitcoin volatility trading, the exchange announced. It will be the first such crypto derivatives instrument in the market and will be priced, margined, and settled in USDC.

Deribit to Offer BTC Volatility Contracts

The BTC DVOL futures will be based on the Deribit Bitcoin Volatility Index (DVOL), a parameter that measures the volatility of the cryptocurrency across markets. It is calculated by implied volatility with a selection of option expiries and strikes on Deribit and provides a 30-day outlook on the expectation of annualized volatility.

The new contract will debut with one expiry and will be available on Deribit as of 27 March 2023. Additionally, the exchange has plans to launch additional expiries in the coming months.

“DVOL can indicate changes in the health and direction of the Bitcoin market, making it an essential tool for traders looking to stay ahead of the curve and a great baseline for volatility trading,” said the CEO of Deribit, John Jansen.

Deribit is among the top cryptocurrency derivatives exchanges, which handled more than $1.4 billion worth of derivatives contracts in the last 24 hours, according to Coinmarketcap. When it comes to cryptocurrency options, the platform dominates, capturing most of the Bitcoin and Ether options markets. It also offers cryptocurrency futures instruments.

“BTC DVOL futures are an exciting new product that will help traders to hedge their positions and take advantage of market volatility while also serving as a tool for additional risk management, alpha generation, and portfolio diversification,” Jansen added. “This product is particularly useful for those who want exposure to volatility but do not want to trade complex options strategies.”

Timing the Market

Deribit is launching the new product when the cryptocurrency market has gained a strong upward momentum following a crisis in the American banking industry. Moreover, two US banks, Signature Bank and Silicon Valley Bank, went under Federal Deposit Insurance Corporation receivership, while another, Silvergate Bank, declared voluntary liquidation.

Bitcoin gained about 36 percent in the last seven days and is trading above $27,000 as of press time. Other major cryptocurrencies, including Ether, BNB, Polygon, and many others, also gained similarly in the recent bull run.

“Having DVOL futures available makes running a portfolio of BTC options even more manageable,” said Greg Magadini, the Director of Derivatives at Amberdata. “Just like traditional PMs will sell an S&P500 future to hedge their stock holdings, Deribit traders can now granularly manage their Vega exposure by trading a liquid DVOL future against their option book. Speculators can also have clean Vega bets by trading DVOL futures while avoiding the complexities of path dependency.”

About the Author: Arnab Shome
Arnab Shome
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About the Author: Arnab Shome
Arnab is an electronics engineer-turned-financial editor. He entered the industry covering the cryptocurrency market for Finance Magnates and later expanded his reach to forex as well. He is passionate about the changing regulatory landscape on financial markets and keenly follows the disruptions in the industry with new-age technologies.
  • 6292 Articles
  • 79 Followers

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