Here at BitOoda, we have maintained that BTC volatility has been muted over the last year. At the beginning of 2019, downside fear dominated the market and call skew became very discounted, enabling cheap bullish trading opportunities. Ever since the rally to $5000’s the BTC Options Vol Surface has flipped with the put skew becoming suppressed relative to historic performance. The call skew is now rich in our opinion with calls being attractive only as a directional play due to still somewhat low implied volatility (around 60% vs, long term averages of 80%). As a relative value (or vol spread) play, the call skew is fully priced, if not expensive. The put skew is relatively attractive but cheap options may become cheaper in the absence of a catalyst. As you can see below from https://www.sk3w.co/options, the 3-month and 6-month BTC ATM vol remains near ~60% implied.
We believe the controversy around tether (USDT) may provide the catalyst to boost volatility and potentially downside. With only 74% of USDT backed by cash and cash equivalents (https://www.coindesk.com/tether-lawyer-confirms-stablecoin-74-percent-backed-by-cash-and-equivalents) there is a potential for a liquidity event hitting the crypto market. Liquidity events tend to force flight to quality (most likely USD, less likely BTC) in the Crypto world. Therefore, buying options as a hedge or a spec trade may be lucrative. We think that hedged puts in June 2019 below $4500 and in September 2019 below $4000 offer the best risk/reward. Bullish traders may want to enter call spreads to take advantage of the richness of the call skew. If you would like us to price up specific structures, or want to discuss rolling/altering your options portfolio, please let us know and we can find the best structure to fit your hedging needs or speculative thesis.