BY ANDREW GIOVINAZZI
February 29, 2024
Yo Pit Crazies,
Check out the Trade Zone and put theory into practice.
Option Pit looks at volatility in options because all underlyings are different but volatility characteristics carry into different names. Probably why folks like technical analysis but few are as good as our own Queen of the Candlesticks Licia Leslie.
Right now Bitcoin and specifically below Proshares Bitcoin Strategy Fund (Ticker: BITO) is exhibiting crazy volatility on the upside.
BITO 6 month chart with 30 day implied volatility (red) and 10 day realized volatility (white)
There is something in this chart you should understand.
MASSIVE IV premium cost is usually unsustainable rally
Note below I highlighted the IV30 way over 10 day realized vol.
That is the 30 day volatility looking forward.
The market is paying just about anything for calls at this point in BITO.
Remember there is only so much liquidity traders can provide.
Then the price has to fly for the options.
BITO 6 month chart with 30 day implied volatility (red) and 10 day realized volatility (white)
As of now there does not look like a top for BITO and Bitcoin in general. For whatever reason, the market is moving to BTC now, no small part that the big firms are pushing it. Vertical call spreads will provide good bang for the buck in wild times.
That chart says wild times.
To Your Trading Success,
-AG
Andrew Giovinazzi
30-Year Trading Pro
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