Monday Alpha #26

TL;DR: For Us To Win, Others Have To Lose; That’s the Game We Play

Author

Marty
September 09, 2024

Monday Alpha

Please note that Premia does not provide investment advice, and nothing herein should be construed as such. Anyone considering trading or holding derivatives or crypto assets should be aware that the risk of loss can be very high, and it is upon each individual to seek advice from an appropriate professional advisor.

Note: ARB STIP BRIDGE incentives are live on Premia. Feel free to come check out the platform, deposit in vaults, trade some options, and get some extra ARB juice. Info on Maker/Taker rewards here.

TL;DR: For Us To Win, Others Have To Lose; That’s the Game We Play

BTC ATM IV

  • 1W: 61.91%

  • 1M: 56.78%

  • 3M: 62.63%

  • 6M: 64.78%

  • Index Price: $55,521

  • DVOL: 54.83

  • BVIV: 58.72

ETH ATM IV

  • 1W: 72.11%

  • 1M: 67.88%

  • 3M: 72.61%

  • 6M: 74.83%

  • Index Price: $2,305

  • DVOL: 68.57

  • EVIV: 73.40

Catalysts to Watch:

  • Wednesday, Sept 11th: U.S. CPI - Expected m/m 0.2%

  • Thursday, Sept 12th: U.S. PPI - Expected m/m 0.2%

  • Thursday, Sept 12th: U.S. Unemployment Claims - Expected 229k

Weekly Insights From GreeksLive

Some large notional volume traded the past week through Greeks.live Block Trade Marketplace! A lot more shorter dated plays as price nuked on September 6. We are now starting to see some medium-term plays like the ETH October play. One interesting play is to buy 2x sell 1x to help cover some of the cost and cap some upside. I would start to expect larger trades coming through on the Nov8 expiry. We still feel like Nov8 is still "cheap".

It is deeply concerning that the US economic data is this bad and far less robust than estimated. The photo above pretty much sums it up. There have been around 1,000,000 jobs revised in recent time… people losing faith in the US data collection. The FED uses this data to make decisions, and if it’s delayed and wrong then it’s helpful to nobody. I’m a seller of 50bps cut and a buyer of 25bps cut at this point in time. People getting ahead of themselves… Slow down… Remember, the day the JPY trade blew up people were calling for an emergency cut on a 4% down day… sigh. This week’s US economic data is one to keep an eye on, as front-end vols are already lifting.

  • July’s growth was revised down from 114,000 – the new number is the weakest jobs increase since December 2020. So far this year, all reads except that of March have been revised lower.

  • The rolling three-month average of NFP gains is now 116,000, the lowest since June 2020.

1-Month Crypto Returns - Large Cap

1-Month Crypto Returns - Small Cap (Shitters rinsed, surprised? You were warned)

BTC & ETH Implied Volatility Term Structure

BTC & ETH Implied Volatility Weekly vs Monthly

Front end is lifted due to US economic data, expect this to climb into event as blow up after. Happens everytime… ride the wave. Nov8 expiry still feels "cheap", expecting more block trade flows on that expiry and vols to rise more into event. BTC is a 100V product, right? Seems to be on these build up into one off events. The only thing we got left in the tank is election hype.

Crypto Funding APR Heatmap

Funding has been reset across the board. Nothing shows too far out of line.

Marty's Thoughts: Batten Down The Hatches

All eyes and traders focusing on this week U.S. economic data, and everyone is trying to be right. Expecting a whipsaw and then further continuation of chop. We seem to be in No Man's Land for the time being. (Note: Whipsaw is a condition where a security's price is moving in one direction when it quickly changes and moves in the opposite direction.)

There is no new interesting catalysts or unknows up on the docket. We have used all our firepower. Besides some one-off vol type plays, things seem dead until the greater market changes. We are already priced in for cuts, there shouldn't be any emergency cuts. As money becomes cheaper to borrow, so people lean more into risk assets, but now doesn't seem to be the time. Probably a bottom post…

In the last newsletter "Zoom Out” I explained my thesis that BTC goes up forever against fiat, shitters are going to 0, and to build a spot bag. This thesis is always in play. That’s not to say we don’t chop around 50-70k for multiple months. I mean look at the monthly baskets—they are giga-rinsed. We tried to warn you, hope you listened pimps. We had an interesting conversation on the Marty Show a couple weeks ago, with Mr. Joe saying BTC is probably in middle to late stage, and how much more of a return can you milk from this. 100k is an 80% move away, not to say that this isn't a big move, but it's not the 100000x return everyone is looking for.

If you have no edge, you are better building a spot bag and finding some edge. Sticking to simple strategy's and stop betting directional will go a long way. I don't want to scare anyone, and I don't want to echo KOLE WORLD, but are you prepared for BTC to hit 30k? 40k? Or will you just gamble all your monies away. This isn't a bear post, this is just to give some people a reality check. Remember, you wanted institutions to come, now they are here. BTC mostly trades Monday - Friday, weekend is dead, and vol will continue to be more and more muted overtime.

Though we are still early in terms of blockchain, and BTC Products in the U.S. institutional space (meaning options, structured products, etc.). I’m not so much sold on anything else. I’m getting tired of the skems and hacks, all the cash grabs, and people still falling for the same ‘ol tricks. Look at the recent FriendTech rug pull… Backed but not endorsed by Paradigm… we need to hold these types of people more accountable, as their actions are becoming more and more unacceptable.

If you are building something cool, interesting, and overall helpful to humanity PLEASE reach out! I need some injected hope.

Final Thoughts

  • BTC 3M Return: -20%

  • SPY 3M Return: +2%

Boomers win again this Summer. However, it’s worth mentioning that we are still up more on a year-to-year basis. Here’s your reminder that Bitcoin is the last free market on the planet, and we should be the biggest winners and losers in market moves. We should also start to price things in earlier and be the first movers.

I guess for us to win, others have to lose, and that’s just the game we play.

Wrap-Up

Recap:

  • Eyes on U.S. economic data later this week

  • Funding reset

  • Premia ARB STIP BRIDGE live

Trade on Premia: https://app.premia.blue/

Marty Community Telegram: https://t.me/optionswithmarty

Mind you there is never a paid group, nor will we ever ask you for money. The alpha is always free.

DeFi Options Premia

Join the next generation of Decentralized Finance with Premia and Archetype

Premia Blue is the first non-custodial options exchange with fully customizable options parameters and risk exposure.

Maximize capital efficiency, define your own risk, and optimize fees earned with Premia Blue on Arbitrum!

Reply

or to participate.