According to BlockBeats, the BitVol index, a measure of Bitcoin's expected volatility derived from tradable Bitcoin option prices, has dropped to 50.96, marking a daily decrease of 1.24%. The index was launched by financial index company T3 Index in collaboration with options trading platform LedgerX.
The BitVol index measures the implied volatility from the prices of tradable Bitcoin options. Implied volatility refers to the volatility implied by the actual price of an option. It is calculated using the B-S option pricing formula, where the actual price of the option and all other parameters except volatility (σ) are substituted into the formula to derive the volatility.
The actual price of an option is formed by competition among many option traders. Therefore, the implied volatility represents the market participants' views and expectations of the future market, and is considered to be the closest to the real volatility at that time.
