How does option OI affect the volatility of digital currencies?

2 answers

• Feb 18, 2022 · 3 years ago
  When it comes to the volatility of digital currencies, the open interest (OI) of options plays a significant role. As the OI increases, it indicates a higher level of market participation and interest in options trading. This increased activity can lead to higher volatility in digital currencies as traders adjust their positions and hedge their risks. Therefore, a higher OI can potentially result in more price fluctuations and increased volatility in the market. It's important to keep an eye on the OI of options when analyzing the volatility of digital currencies.
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• Feb 18, 2022 · 3 years ago
  At BYDFi, we've observed that option OI can indeed affect the volatility of digital currencies. When the OI of options increases, it often corresponds to a higher level of market activity and trading volume. This increased activity can lead to more price fluctuations and higher volatility in digital currencies. However, it's important to note that option OI is just one factor among many that can influence volatility. Other factors such as market news, investor sentiment, and macroeconomic trends also play a significant role. Therefore, it's crucial to consider a holistic approach when analyzing the volatility of digital currencies.
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