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How does volatility skew affect cryptocurrency trading and what should I do about it?

balaji patelAug 05, 2023 · 2 years ago1 answers

Can you explain how volatility skew impacts cryptocurrency trading and provide some suggestions on how to deal with it?

Cryptocurrency
Trading
Volatility Skew

1 answers

  • Therkildsen SinclairJan 23, 2021 · 4 years ago
    Volatility skew plays a crucial role in cryptocurrency trading. It reflects the market's expectation of future price movements. When there is a skew, it indicates that the market expects higher volatility in one direction compared to the other. Traders can use this information to adjust their trading strategies. For example, if there is a skew towards higher volatility on the downside, traders may consider buying put options for downside protection. Conversely, if there is a skew towards higher volatility on the upside, traders may consider selling call options to generate income. It's important to stay updated on volatility skew and adapt trading strategies accordingly to stay ahead in the cryptocurrency market.

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