Traders Fear "Tail Risk" in Bitcoin Market as Out-of-the-Money Options Pricing Suggests Possibility of Rare Event

2023/08/28 07:01

Traders in the bitcoin market are pricing in "tail risk," as indicated by the relative richness of out-of-the-money call and put options. This suggests a higher possibility of an investment moving more than three standard deviations from the mean. The butterfly index, which gauges the relative richness of these options, has risen to yearly highs, indicating traders' fear of tail risk or sensitivity to uncertainty.

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