In the most recent update, Deribit is set to introduce bitcoin (BTC) volatility futures, presenting an uncomplicated alternative to digital asset investors to safeguard themselves against market fluctuations, in contrast to the usual options, according to the latest report.
Headquartered in Panama City, Panama, Deribit is the world’s largest cryptocurrency options exchange by volume and open interest, with approximately 90% market share in Bitcoin and Ethereum options. The exchange also offers select futures on cryptocurrencies.
Alternative For Managing the Risk Of Bitcoin’s Volatility
Deribit will shortly make available futures associated with their forward-thinking bitcoin volatility index (DVOL) under the ticker BTCDVOL, disclosed the exchange’s Chief Commercial Officer, Luuk Strijers, on March 1st, with the launch scheduled for the end of March.
According to the report, DVOL, launched in 2021, gauges bitcoin’s 30-day implied volatility through Deribit’s options order book. Implied volatility shows the expected price turbulence in the options market over a specific period.
Instead of predicting price direction, volatility trading bets on the asset’s future stability. Traders can now buy and sell volatility directly, similar to bitcoin futures, without complex options strategies that involve buying and selling options at different strike prices with a high-risk tolerance.
The product could attract institutional and retail investors, like Cboe’s VIX futures, which track the market’s expectation for volatility in the S&P 500 over the next 30 days.
According to Strijers, DVOL futures offer a unique and different approach for traders to manage risk and take advantage of market volatility. This new product particularly appeals to those who want to gain exposure to BTC volatility without the complexity of options strategies.
The report stated that Deribit users would initially only have access to one-month expiry futures, but the exchange plans to expand the offering to five expiries later. These volatility futures are linear, meaning that the payoff is linearly related to the spot price of the underlying asset.
However, DVOL futures, like other derivatives, are leveraged products that can magnify both gains and losses. The futures will be priced, margined, and settled in Circle’s U.S. dollar-pegged stablecoin, USDC.
In addition to the new product launch, last month, Deribit announced that it had selected Eventus’ Validus platform to provide market abuse monitoring on the exchange.
However, the launch of DVOL futures provides a more accessible way for digital asset investors to hedge against market volatility without understanding the complexities of options strategies.
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