According to BlockBeats, the BitVol Index, a measure of Bitcoin's expected volatility derived from the prices of tradable Bitcoin options, fell to 50.96, marking a daily decline of 1.24%. The index was launched by financial index company T3 Index in cooperation with the options trading platform LedgerX.
The BitVol Index measures the implied volatility of 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 BS options 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 shaped by competition among many options traders. Therefore, implied volatility represents market participants' opinions and expectations of the future market, and is considered the closest to the true volatility at that time.
