Matrixport's DeFiOnTarget prefers purchasing ether call options or bullish bets against a short position in bitcoin calls. reports godbole17.
The trade idea is based on the assumption that the spread between the annualized 30-day realized or historical volatility of ether and bitcoin would bounce from the current unusually low level. That, coupled with the upcoming Ethereum Shanghai upgrade, would make ether calls pricier relative to bitcoin calls.
Volatility is mean-reverting and has a positive impact on options prices. In other words, periods of unusually low volatility are followed by increased price turbulence, which, in turn, boosts demand for options, making them pricier. Thus, traders tend to buy options when volatility is lower than its long-term average.
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