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Jeff Park Profile picture
@dgt10011
Nov 20, 2024 • 14 tweets • 7 min read • Read on X
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IBIT Options Trading Recap!

Today marks the historic Day 1 of BTC ETF options launch. It did not disappoint, with over $1.86Bn in notional traded! There were some notable takeaways in my opinion, so here is a quick thread on the Top 10 Most Interesting Observations I made 👇
1/ Just as we expected, the market launched with a beautiful “volatility smile” quickly established by 945AM and for the rest of the day. In fact, the smile got even wider throughout the day, finishing with higher wings by EoD. Image
2/ But the path was not totally straight forward, and the below BVIV Index from @volmexfinance is representative of the IV move for IBIT options throughout the day as well, where there were two local peaks and a creep down by the end. More interestingly, it did NOT match the upward sloping BTC price movement (then down) in a predictable way. 👀Image
3/ The most heavily traded contract was 01/17/24 C55, which traded 40k+! Most noteworthy to me, however, was it has already surpassed the position limit of 25k. As I shared yesterday the 25k limit is too small relative to the deep liquidity IBIT has demonstrated over the months.Image
4/ And so while that contract got a lot of attention today, the one that I was personally most intrigued by was actually the 12/20/24 C100, which was the most heavily traded contract with the least amount of delta - at 3%! This is a true lottery ticket, and the implied vol cleared at 105%. Even more interesting was how heavy the volume was at the first hour of the market open. It means a serious investor was loading it up at 10AM, and the price steadily increased with vol getting bid up. This was likely the been the biggest vega opportunity of the day.Image
Image
5/ Another thing to note is if you look at the Top 10 securities by Calls traded ranked by change in Open Interest, BITI (short BTC ETF) comes up! Its OI went up by 100% (albeit smaller denominator) but I thought it was interesting especially given most of it was calls. Could be a vol arb play.Image
6/ The Put/call ratio demonstrated an overwhelming interest in upside calls vs downside puts, at something like 0.23. However, what is even more interesting is if you segment it by Expiry Date. Once you do that, you can see that the P/C ratio meaningfully decreases as you go out further in tenor - where The Jan26/27 contracts show a put call ratio of 0.08! That means there is roughly a 10x imbalance for upside.Image
7/ Most of these are in fact call buying with C100 leading the way, collectively trading over 10k contracts together in those maturity buckets. In fact, another way to view this imbalance is by seeing the bubble charts of those two expiries. Unlike the other chains, you can see by the outsized bubble on the right that deep OTM calls were massively bid.Image
Image
8/ You can also observe for those expiries, the vol is being bid pretty much throughout the day. In fact, if you look at the last hour of the trading day, as Bitcoin spot comes in, vol stays elevated as the price holds up. Image
9/ So what does this all mean? It confirms what @fejau already shared intraday. And the rationale for this is actually quite logical as I explained below: "option margining favors bettors of very improbable and long-dated events" ie. OTM leap calls! Image
10/ And I couldn't post this thread with referencing $MSTR, which has been the killer trade of the past 2 days. Many people thought that the launch of IBIT options would curtail options trading in MSTR, but today would have proven you completely wrong. In fact, MSTRs vol decoupled with Bitcoin meaningfully in the last hour, where it closed even higher than where we started in the day. We'll need a few more observation period to see where we stabilize but one thing so far is clear: MSTR is in its own league.Image
11/ Lastly, PSA that $BITB options go live tomorrow! It will be another option chain alongside IBIT and others for investors to consider before buying/selling and determining where the best value may lie. I continue to remain convicted that the 'non-institutional' trading will happen on non-IBIT ETFs, and therefore there may be more opportunities for professional retail investors. I wil try to cover what I see on this tomorrow.

See you all on the other side. 🫡
x.com/HHorsley/statu…
12/ also quick shoutout to multicoin and @SpencerApplebau @davijlu on pushing the frontier of what based prime brokerage could look like beyond our wildest dreams. perfect timing with the launch of ETF options challenging these very capital efficiency questions + SOL nearing highs to mark a remarkable 7y journey. Kudos to teamImage
BITB Disclosures & Prospectus: BITB is not an investment company registered under the Investment Company Act of 1940 and is not afforded its protections. BITB is not suitable for all investors. BITB is subject to significant risk and heightened volatility.bitbetf.com/welcome

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More from @dgt10011

Jeff Park Profile picture
Mar 17
One of the most brutal moments of the Bretton Woods negotiations came when Keynes, exasperated by White’s steamrolling tactics, snapped:

“We are not here as beggars.”

But that was exactly the problem—Britain was a beggar, drowning in war debt and completely at the mercy of U.S.
In the end, Keynes had to swallow his pride and accept the deal on American terms: a dollar-backed system that entrenched U.S. financial dominance for the next half-century. The so-called negotiation was never such—it was a lesson in power, and Keynes walked away knowing he lost.
The stablecoin moment will become one of those rare, pivotal points in history, like the creation of the Federal Reserve, Bretton Woods, Nixon Shock—where the rules of money itself are being rewritten.

We will soon find out who our Harry Dexter White is. Keep your eyes open.
Read 4 tweets
Jeff Park Profile picture
Feb 5
1/ Had a lively chat with @JSeyff @krugermacro @NoelleInMadrid on Trump's economic agenda, revisiting an "Econ 101" sacred truth: tariffs create deadweight losses and therefore are negative EV. Here's a colorful thread on why this famous graph is misleading: Image
2/ Let me first break down the graph. It shows how globalization lowers the price of goods, requiring foreign producers to fill the supply gap since domestic producers can only supply Q1, while consumers demand Q4.

When tariffs are introduced, prices rise, allowing governments to capture the spread between the higher price and the (since reduced) foreign production. Foreign production declines for two reasons: domestic producers can ramp up supply at the higher price, and consumer demand shrinks due to the increased cost.

Got all that? If so, keep going. If not, make sure you understand this first—because we’re about to dive deep into the fantastic rabbit hole of my brain.Image
3/ First, let's check our bias at the door: the famous graph actually tricks the student's mind because it visually anchors you to assume the starting point was at the perfect equilibrium (like below). It disregards two things 1) the possibility of price preferences driven by factors beyond pure economic incentives and assumes that all goods, whether imported or exported, are perfect substitutes—oversimplifying real-world market dynamics, and more importantly, 2) globalization does not look like this graph at all (more on that later).Image
Read 8 tweets
Jeff Park Profile picture
Feb 5
It’s surprising how many people overlooked the most important thing @DavidSacks said yesterday about stablecoins:

“Stablecoin demand could lower long-term interest rates.”

That’s the real takeaway. Fiscal dominance is unstoppable and stablecoins will be America’s new UST.
called it ~3 years ago:
Stablecoins essentially suffer the same Triffin dilemma. To put it simply, what is good for the dollar is not necessarily good for "dollar policy."

You want more trade facilitation, but you don't want foreigners to hoard the exact medium of exchange. 👇
Read 8 tweets
Jeff Park Profile picture
Feb 2
This is the only thing you need to read about tariffs to understand Bitcoin for 2025. This is undoubtedly my highest conviction macro trade for the year: Plaza Accord 2.0 is coming.

Bookmark this and revisit as the financial war unravels sending Bitcoin violently higher. Image
For my mobile readers:

To understand tariffs today, there are two contexts you have to frame the conversation in: 1) the curse of the Triffin dilemma, and 2) Trump’s personal goals. By analyzing both, the end game becomes clear: tariffs might be just a temporary tool, but the permanent conclusion is that Bitcoin is not only going higher—but faster.

First, the Triffin dilemma: The US dollar status as a reserve currency gives the US what is called “exorbitant privilege” in financial transactions/trade, and it has a few implications: 1) the dollar is structurally overvalued due to its need to be held as reserves by other countries in a price-inelastic manner, 2) the US has to run a persistent trade balance deficit to supply the world with those dollars, and 3) the US government therefore can borrow persistently cheaper than it should be able to. The US wants to keep #3, but rid #1 and #2–but how? Enter tariffs.

Recognize that tariffs are often a temporary negotiation tool to achieve a goal. The ultimate goal is to seek a multi-lateral agreement to weaken the dollar, essentially a Plaza Accord 2.0. One hypothetical way this could happen is that the US would explicitly specify that countries have to reduce their dollar reserves, while also requiring them to shift the duration of the UST holding further out. In other words, Trump is trying to find a way to implement a “YCC, not YCC” strategy within the realms of the executive branch. No doubt Bessent is on board, recognizing that he was left a bag of trash by Yellen, whose legacy will have been the near-permanent impairment of the Treasury’s ability to manage duration by doubling the proportion of debt financing to T-bills (adding fake liquidity), exposing the US to the mercy of the whims of refinancing– idiotically while interest rates were beginning to rise. The cost to US taxpayers here cannot be understated.

As a result, the US is charting a path to achieve the holy grail of fiat alchemy: lower dollar and lower yield.

This brings me to my second point: I have shared before that Trump’s #1 goal is to lower the 10y rate, the reason being that his own bags depend upon it: real estate. His obsession with Powell cutting short-term rates, then realizing it is not working, is the catalyst. Never doubt the uncomplicated incentives of the transparently profit-motivated, and align yourself next to him. Mark my words: the 10y is going to go down, whatever it takes.

The asset to own therefore is Bitcoin. In a world of weaker dollar and weaker US rates, something broken pundits will tell you is impossible (because they can’t model statecraft), risk assets in the US will fly through the roof beyond your wildest imagination, for it is likely a giant tax cut will have to accompany the higher costs borne by the loss of comparative advantage. The tariff costs, most likely through higher inflation, will be shared by both US and trade partners, but the relative impact will be much heavier on foreigners. These countries then will have to find a way to fend off their weak growth issues leading to stimulating the economy through monetary and fiscal policies that ultimately cause currency debasement. The outraged citizens of these countries will experience a mini-financial crisis and look for alternatives. And unlike the 1970s when the world was largely offline, today we are not only online–we are onchain. So while both sides of the trade imbalance equation will want Bitcoin for two different reasons, the end result is the same: higher, violently faster—for we are at war.

TLDR: You simply have not yet grasped how amazing a sustained tariff war is going to be for Bitcoin in the long run.
Here is a one-of-a-kind reference material from last summer, where I had the honor to host a lively conversation between @SalehaMohsin and @resistancemoney on this very topic: Image
Read 5 tweets
Jeff Park Profile picture
Feb 1
When the US went off gold in 1971, Nixon imposed a 10% universal tariff on all imports to pressure trade partners into accepting devaluation w/o retaliation.

But before declaring tariffs are inherently bad, consider how US trade continued to dominate the global economy first. Image
The global economy is a complex fluid system. It’s possible shock tariffs can reduce demand for dollars and lower trade deficit, weakening the global dollar supply-demand dynamics. It likely will drive inflation higher, but with the right Fed policies, can also weaken the dollar.
On the other hand, if the dangerous game of brinkmanship fails and results in retaliatory policies violently abrupt global growth, it may create an uncontrollable “flight to safety” where investors demand for UST and associated funding can push the dollar higher as well.
Read 5 tweets
Jeff Park Profile picture
Jan 13
When realized volatility goes up for all assets, the value proposition of BTC volatility goes down on a relative basis. Ie the cost of capital to hold BTC increases.

Then as LT rates rise as a source of competition for that same capital, BTC cost of capital increases even more.
This is one of the many technical reasons, in addition to global liquidity indicators and the collateral multiplier, why the rise in MOVE coinciding with a rise in LT nominal rate is bad for risk assets, but particularly for Bitcoin.
Rising DXY is the universal chaos agent as the global carry system crumbles with a strong $. CT bulls keeping that Trump's SBR announcement will be an upward catalyst aren't realizing the path dependence in which Trump can't push SBR if the global financial order implodes first.
Read 7 tweets

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