- Deribit to list BTC, ETH options expiring four days after the U.S. elections on Nov. 4.Traders said these options will help define risk and protect capital from expected volatility in the lead-up to and following the binary event.
The proposal to add options for elections that automatically expire based on market leaders like Bitcoin and Etherean has received favorable responses from traders.
“The upcoming U.S. election holds significant importance for risk assets such as cryptocurrencies and has the power to influence fiscal policy and financial stability in a clear-cut manner. Given this uncertainty, it makes perfect sense that Deribit would introduce options with this expiration date,” Jeff Anderson, a senior trader at STS Digital, explained to CoinDesk.
As a researcher studying the intersection of politics and cryptocurrencies, I believe the upcoming election holds significant implications for digital assets. The Republican candidate, Donald Trump, has recently shown interest in cryptocurrencies, setting him apart from his Democratic rival, Joe Biden. While Trump’s crypto regulation plans remain unclear, his engagement with bitcoin miners and commitment to attend the Nashville conference have earned him the industry’s backing. This support positions Bitcoin and the broader market as a potential investment in Trump’s presidency.
Deribit’s election-themed bitcoin and ethereum options will become available for trading on July 18 at 8:00 UTC. These contracts will then expire three days after the election results are announced on November 5. On Deribit’s platform, one option contract equates to one unit of Bitcoin or Ethereum.
As a crypto market analyst at CEC Capital, I find Deribit’s new options a shrewd move. These give traders the flexibility to set up positions before, during, and even after the elections, with an added three-day buffer following the results announcement. This innovative feature enables traders to gain leverage while simultaneously hedging their exposure.
Market vendors often employ the use of options to mitigate risk during unpredictable situations, such as U.S. elections or company earnings reports, where the final results are undetermined.
For a trader anticipating a significant price shift in an asset due to a high-impact news announcement, they might consider purchasing a straddle. This strategy involves buying both the put and call options with the same strike price and expiration date set after the expected news event. (CME’s “using equity options in an election year” explanation)
Based on my extensive experience in the financial markets, I’ve noticed that traders frequently place certain types of options trades just before major macroeconomic announcements or company earnings reports. The rationale behind this strategy is that if the price of the underlying asset shifts significantly from the strike price following the release, the trade could become profitable. This has been a common occurrence throughout my career as an options trader, and I’ve seen both successful and unsuccessful outcomes from employing such strategies.
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2024-07-17 11:58