The CFTC just released its commitment of trader’s report ending on the fiscal week of Dec. 2nd.
BitMex’s open interest is hovering in the $600MM range as we go into the holiday season. That is very low open interest across multiple venues as well as OI trending lower for CME over the last few weeks. The short covering has been the most pronounced week over week so lower probability of a short squeeze. If there’s a rally, it most likely will come from new buying interest.
Normally, I would recommend selling short dated options with just the variables above. HOWEVER, volatility especially for December is already cheap, and there are quite a lot of unknowns in Asia. This could create a lot of realized volatility eventually. But because the OI is so low it means a lot of people aren’t willing to take a price bet right now and I don’t see this coming to fruition until more participants come in.
These two factors seem the most dominant right now. Until one of these two factors change OR another dominant factor comes into play, I would only put on small bets outright trades and be willing to cuts loses very quickly.
There still are interesting relative arbitrage ideas and hedging structures that were mentioned in our Tuesday report.
Have a great weekend from your friends at BitOoda and please don’t hesitate to reach out with any questions.