Unit 3 · Level 3 · Derivatives data
Options tell on the crowd
From the Options course you know puts are downside insurance and calls are upside tickets. Crypto options markets publish their own crowd data: the put/call ratio (how much insurance versus how many lottery tickets) and skew (whether puts or calls cost more in implied volatility). When puts trade rich, the market is paying up for crash protection; when calls trade rich (common in crypto manias), the crowd is paying for upside. Options prices are opinions with money behind them.
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What you get asked
A rising put/call ratio suggests the options crowd is…
More puts relative to calls = more insurance demand. Like all crowd gauges it reads best at extremes. Panic-level put buying has often marked fear peaks.
In equity markets, puts usually cost more than equivalent calls. What's notable about crypto in mania phases?
Stocks fear crashes, so puts stay rich. Crypto periodically fears missing the moon. Inverted skew is a measurable fingerprint of FOMO.
Match each options reading to its crowd mood
Implied volatility and skew are the crowd's forecast, priced in real money. Wrong sometimes, but never cheap talk.
Options skew compares the implied ___ of puts versus calls to reveal which side the crowd is paying up for.
Skew is measured in implied-volatility points. Rich put IV = fear premium; rich call IV = greed premium. Same maths as the Options course, new use.
The honest caveat on crypto options data as a signal is…
Most crypto options flow runs through a handful of venues like Deribit, and pros dominate. It's a sharp crowd worth listening to, but not the whole market's voice. 🐜
The rest of this unit
Funding, open interest, liquidations, options: read the leverage that moves crypto prices.