By Michael Scott
Crypto exchange Deribit launches Bitcoin and Ether options linked to US Elections, in key acceptance from crypto traders.
Crypto traders hail Deribit’s new options, which can define risks and safeguard capital from potential volatility in the days leading up to November 5 and after the binary event.
Crypto trading platform Deribit announced the listing of ETH and BTC options. The newly unveiled product is set to expire four days following the US elections on November 5.
Traders consider the options timely in defining risk and securing capital from likely volatility attributed to the polls.
Deribit Unveils Elections Expiry for ETH, BTC Options
Deribit Tuesday’s statement confirmed the addition of the options in the leading platform in crypto options exchange. The exchange anticipates the options for traders to effectively manage BTC and ETH positions contextualized in the presidential election outcome.
Deribit’s move to unveil election expiration options linked to Bitcoin and the largest altcoin is attracting positive feedback from crypto traders. STS Digital trader Jeff Anderson considers the US election the focal point for risky assets, among them crypto.
As such, the November 5 poll harbors a binary effect on financial stability and fiscal policy. Anderson considers options a vital tool for hedging uncertainty, so it is natural for Deribit to list ETH and BTC options.
The looming election is critical for crypto, particularly with the recent emergence of Republican candidate Trump, who embraces digital assets. The stance contrasts the rival incumbent, Joe Biden.
While Trump has yet to set out a detailed roadmap for crypto regulation, the recent outreach by the Grand Old Party (GOP) nominee is evident to the bitcoin miners. Besides, the former president is scheduled to appear at Nashville’s Bitcoin Conference later this month. His attendance is winning him the industry’s support, as illustrated by the wider market bet on his presidency.
The stake placed at this election suggests BTC and ETH could witness higher price volatility both in the lead-up and post. Such an outcome necessitates investors focus on adopting derivatives such as options to hedge the underlying portfolios.
Insure Against Extreme Price Movements
The options insure traders against the underlying asset’s bearish and bullish price movements. The put option enables the investor to hedge against price tumbles while a call shields against the upside volatility.
The election expiry options went live on July 18 starting at 8:00 UTC and are scheduled to expire on November 8. Notably, one option contract on Deribit represents 1 BTC or ETH.
Deribit is pulling a smart move in the options to allow traders to take a proactive position during and after November 5 while guaranteeing a three-day buffer after the outcome. CEC Capital ETF specialist Laurent Kssis hails the options as an excellent channel for traders to leverage and hedge their exposure simultaneously.
Conventional market traders tap options in managing their exposure when confronting the uncertain outcome of binary events such as the US elections and corporate earnings.
Global derivatives platform CME’s recent publication supports equity options in the election year as an opportunity for traders to buy a straddle. Doing so is necessary, particularly when a headline event could trigger explosive shifts in either direction.
CME’s explainer adds that options traders arise before the major macroeconomic release and earnings report. Notably, higher movement of the underlying asset from the strike price surpassing the options’ cost translates to a profitable trade.