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Chat With Traders cover image

285 · Greg Magadini - Cashing in Through Exploiting Volatility

Chat With Traders

NOTE

Derivatives Drive: A Divergence in Markets

The cryptocurrency market exhibits a significantly smaller derivatives market compared to spot trading, with the open interest in options for Bitcoin at only 6% of its market cap, contrasting with the S&P 500's options, which are at 200% of its market cap. This disparity indicates that market maker activities in crypto, such as hedging gamma exposure through underlying asset purchases, are not as impactful as in traditional stock markets. As a result, the influence of options trading on price dynamics in the crypto space is considerably limited.

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