Today, we're diving into a topic that's a bit more technical but essential. I've briefly mentioned before how option contract prices are calculated. If you remember, the Nobel Prize-winning Black Scholes Merton differential equation determined the value of contracts. Let's first take a look at this equation.
Economists Fischer Black and Myron Scholes invented the risk-neutral argument in 1968 by showing that a dynamic revision of a portfolio eliminated the expected return of the security. They first applied this formula to the market but went bankrupt due to a lack of risk management. In 1970, they returned to academic work and started working on the formula. After 3 years of work, they published a paper titled "The Pricing of Options and Corporate Liabilities." A mathematical model is an attempt to translate the behavior of some system into mathematical language. By doing so it can allow for better understanding of the system more powerful analysis as well as testing the effect of changes. It is also what is used to calculate the greeks.
The fundamental principle behind the model is to hedge the option by buying and selling the underlying asset in a specific way to eliminate risk. This type of hedging is called "continuously revised delta hedging" and forms the basis of more complex hedging strategies used by investment banks and hedge funds.

The formula led to a boom in options trading and provided mathematical legitimacy to the activities of the Chicago Board Options Exchange and other options markets around the world. Robert C. Merton was the first to publish a paper expanding the mathematical understanding of the options pricing model and coined the term "Black-Scholes options pricing model." Merton contributed to Black and Scholes' paper. In 1997, Scholes and Merton jointly won the Nobel Prize in Economics for their work. Fisher Black couldn't receive the award as he passed away in 1995.
Understanding why this is so important and why it won a Nobel Prize isn't actually difficult, although it might seem simple to us. Valuing a product 1 month or 3 months into the future is really challenging, especially with somewhat high inflation, interest rates, and in the product being valued. And a fair agreement is needed where neither the buyer nor the seller wants to transfer their risk to the other party. They create such an equation for the calculation to be real and appealing to everyone.

Let's look at the important indicators here. At the same time, let's examine how compatible the formula is with the real-life market and what the changes could be.
N(x) = The normal distribution of daily returns of a good is examined. How the daily return of a product is distributed is one of the most important factors in valuing a product.T = Time left until expirationS = Current price of the productK = The price at which the agreement will be mader = Interest rate of the currency in which the product is traded (The risk-free return of the product is as much as the interest rate of the opposing asset)σ = Annual volatility of the productIncreasing the underlying price will increase the price of calls, and decrease the price of puts.Increasing the strike price will decrease the price of calls, and increase the price of puts.As time passes (decreasing DTE) both calls and puts will lose value.Increasing the interest rate will increase the price of calls, and decrease the price of puts.Increasing implied volatility will increase the price of both calls and puts.
You can see the Basic Hypotheses of the Black-Scholes Model in the image below. The most striking thing here is "Random Walk." It's the assumption that the price moves completely randomly, just as we can't know where a piece of branch floating on water will be in 1 minute (see: Brownian Motion), we can't know where the price will be in 1 day, month, or year.
If you don't accept this, you can stop reading the article here, because you're saying you can know the price and you can bet all your money on that condition.

Let's solve an example and see how the formula works in real market conditions.
You can make your own calculation from sites. I found the annual volatility by converting the average of the daily volatility in the month.
You can see the data I took from my notes here.

As you can see, the calculation found the Call price for the September 27, 2024 ETH 2700 Contract to be $54, and the Put contract price to be $447. Well, what are the current prices in real market conditions?

Yes, you're not seeing it wrong, the Call price is around $18, and the Put price is around $410. So why is there such a big difference? Please think about it first, before reading what I've written below, take a look at the table and try to find out what could be such a big factor, why those selling Call contracts want to sell their contracts at such a low price.
If you're ready, go back to the table and look at the percentages in the "IV Ask" section, and you'll see your answer. IV, as you remember, is the abbreviation for Implied Volatility. In other words, those selling this contract don't expect 90% annual volatility, they expect about 65% volatility. The fact that the price is much below the mathematical average also shows how much the demand has decreased and that Implied Volatility has decreased for this reason. In the context of this contract, our market's volatility expectation is around 65%. Well, let's try and verify it.

As you can see, it has come to the current market price. This is the biggest indicator of real market conditions and that the price moves randomly. You can use this data not only for options but also to see how likely the price you expect is in your own charts. The VIX Index, which is very popular now, is calculated from a large number of contracts of about 100 products. It's also known as the fear index.
As you can see from here, we actually look at the charts we should look at last, first. In our analyses, you need to see the expectations of the big market makers, see the implied volatility, and then make an analysis by considering the importance of those levels by looking at the charts. Because the data visible from the beginning of the article are not an analysis but data directly showing the real market. It absolutely reflects the market. But let's not forget that these data include expectations from now until September 27. When factors such as news, volatility changes occur tomorrow, these data will also be affected.
I'll give one last bit of information and end my article while you think about this until the next article. We found the price of the contract, we valued a product, but how does the price of this contract continue to be valued so quickly in market conditions? Does the contract price increase to the same degree as the spot price increases? In other words, when ETH goes from 2300 to 2320, does the contract price increase by $20 or less? What happens if volatility increases or interest rates change? We use Greeks for such questions. For now, I'm ending with a brief definition. Wishing you days with better analysis.
Options Greeks

#CPI_BTC_Watch #BinanceBlockchainWeek #BlackScholes #OptionsTrading #OptionsExpiration $ETH $BTC

What was expected in the first week of September, what happened?
First, you can review my article at this link to see our expectations and possibilities as we enter September.
Bitcoin
The average volatility for September is 25%, with Deribit BTC DVOL around 58%. The average weekly implied volatility for September is around 12%. We saw this expected volatility happened in the first week. The market experienced a 10% drop. You can see the details in the table below.

This week, with 12% implied volatility, our price range is 48.2k-61.5k. The weekly opening was positive in the Asian market, and if we don’t see a sharp sell-off in the US market, we can consider that the price is now looking for a turnaround and may rise.

Ethereum
The average volatility for September is 35%, with Deribit ETH DVOL around 68%. The average weekly implied volatility for September is around 15%. We saw this expected volatility materialize in the first week. The market experienced a 10% drop.

This week, with 15% implied volatility, our price range is $1950–$2650. The ETHBTC chart is also potentially forming a bottom and has been holding above an important support for a long time. If it can’t hold at this level, we might see a sharp sell-off. It could find good support from the 0.038 area and bounce back above the support.

After seeing the first week’s movements in September, let’s now look at the general data.
The Funding Rate for BTC and ETH is at zero. In option contracts, there are 1,060,070 Call and 454,700 Put Open Interest contracts. The largest portion of these appears to be dated for the end of September and the end of the year. If you want to examine BTC and ETH specifically, you can look at the two images below.

Current $BTC and $ETH September 27 contracts and prices. They’ve generally become very cheap. You might want to take a look.

We have come to the end of this weekly article. I hope the days when we will start to rise and make profits are waiting for us. Good day to all.
#BTC100Ksoon #ETH #Ethereum #Bitcoin #OptionTrading

Double-Edged Sword: Capitalizing on NFP Volatility with Options
Today, we have crucial NFP and Unemployment data coming at 15:30. Expect high volatility both before and after the release. So, how can we set up a position to trade this volatility? Let’s see what we can do with a $22 cost.

It’s not unreasonable to expect over 5% volatility today. That’s why I want to keep my cost low while maximizing potential gains. $ETH is currently around 2360. A 5% move up would be 2480, while 5% down would be 2245. We’re still within the weekly 15% range. As you can see, the 2250 put is available for $12, and the 2475 call for $10.

I’m showing the September 8th contract because I believe volatility will continue after the data release. If you’re thinking more intraday, you might want to check out the September 7th contract.
If you look at data release days in general, you’ll notice that prices often leave wicks both up and down. The Fed’s main concerns are avoiding recession and maintaining workforce stability. So, if we get poor data, markets will likely react with selling. You can manage your position based on the data when it’s released.

Let’s look at one possible scenario to give you an idea of how to manage this trade.
If there’s an uptick before the data release, your call contract will be in profit. If the data comes in low, there will likely be a sharp sell-off. At that point, you could close the call contract and continue with just the put contract. This way, you maximize profit in both directions. The key here is good risk management and not trying to catch the exact top or bottom. While it’s nice that there’s no stop loss or liquidation, poor risk management could still result in selling your contracts at a loss.
Here’s hoping for a month of continued uptrends. Have a great day, everyone!

#NFPWatch #USDataImpact #CryptoMarketMoves #PowellAtJacksonHole #Ethereum

Turning Market Uncertainty into Profit, How to Win When Others Panic
Hello everyone,
As we enter September, we're heading into a time of high volatility in the markets. You've probably heard the saying, "Sell in May and go away, stay away till St. Leger Day." The St. Leger Day mentioned here refers to one of the oldest horse racing festivals in England, held on September 14th. You might have also heard of the "September effect," known for stock markets typically showing their worst performance in September.
So, September is either an important time to buy declining assets to make use of idle money, or to establish sell positions that have a high probability of being profitable.
However, we also have some significant bullish news ahead of us, such as the release of former Binance CEO CZ from prison, the first interest rate cut in 4 years, and subsequent discussions about interest rate cuts for the rest of the year. We have both highly bullish news and highly bearish expectations ahead of us. So, what are we going to do in this situation?

If we buy an asset, a 30% drop wouldn't surprise us, but it's also quite possible that the world will generally overcome the crisis, leading to an increase in money supply and risk appetite. In other words, buying an asset is one problem, not buying is another.
If we take a position in Perpetual or Futures trading, the probability of getting stopped out is high, and the lack of confidence after a few attempts is an additional drawback.
When you buy an asset, holding onto it during a downturn and then selling too early when it rises again due to that psychology are common side effects.

Have you ever wondered what the big players, the whales in the market, do in such situations? How do they position themselves? Well, I'm showing you the best example of it right here.
The trading method we'll use is buy call and buy put, which I've mentioned in my previous articles.It's important to know that ETH volatility is around 55-60%.This shouldn't be interpreted as it will go 60% up or down. For example, a 60% volatility could also occur with a 10% decrease, 30% increase, 5% decrease, and 15% increase.It might be more sensible to buy our contracts at the ATM level, but for the sake of experimenting, we can also buy from further away from the current price because it's cheaper.We can strengthen our strategy and increase its potential by looking at possible drops and rises from a technical perspective. Now, I'll explain through an example.

The current $ETH price is around $2450. We can set up this trade for any time frame you want, but we'll do it for the September 27th contract now. For about 5% below and above, our contracts are 2300P $96 and 2600C $114. Our total cost will be $210.
If the price goes below 2300 in September, our put contract will profit, if it goes above 2600, our call contract will profit.Our maximum loss will occur if the price stays at the level where we bought the contracts. However, our maximum loss cannot exceed $210, which we paid for the contracts.I'd like to mention two strategies you can use here:
Let's assume the price is $2000 on September 4th. This means the 2300p will be $300 in profit. If we think this correction is sufficient and believe the price will now go up, we can close this contract. Since our contract is ITM, the contract price will probably be around $400-500. Thus, we've made about $200 profit, which is about 100% profit against our total cost of $210. And we'll still have the September 27th 2600 call contract, which will still have value even though the price has dropped, as the Expiration Date is far away.Another method is to open a perpetual trade for the amount of ETH you bought in the contract, which will lock in your profit. Using the same price example, if the contract were to end today, we would have made $300 profit for 1 ETH contract. If we open a long position for 1 ETH in perpetual trades, the profit of the contract will be fixed at that price. If the price continues to fall, the contract will profit; if it rises, our long position will profit. Of course, factors like funding fees need to be considered carefully in this situation.If the price continues to fall, the contract price will likely profit much more than the loss of the long position.

As you can see, we're trading both up and down without any stop or risk. And if the price goes up after such a drop, our call contract will also gain value. When the price recovers to 2200, you can also buy a shorter-term 2300 contract. If it reaches our 2600 call contract, the 2300C contract will have made $300 profit. You can consider such situations depending on your risk appetite.
This strategy is called Long Straddle. If you want to examine it further, you can do more research.
Areas of use:
- In situations with high price impact such as expected news, events, and occurrences,
- You can reduce your cost and increase your profit by buying a shorter-term contract, for example, a 1-week contract.
- In times when the price has been accumulating for a while and is likely to break out in one direction,
- You can use it to minimize losses if there's a drop and maximize profits if there's a rise in your spot products.
Advantages:
- The ability to profit regardless of which direction it goes, as it's a non-directional trade,
- Both the risk and the gain are at an optimal level
Disadvantages:
- High premium cost due to buying two contracts
- More limited profit potential compared to a one-way trade, as our cost is higher.

Overall, when we look at it, trading with such methods makes your trade safer, with known risk and optimal profit potential against this risk, which makes this method valuable. Of course, you're not limited to just these; you can do this trade with different dates as well. You can try different strategies like buying a call contract for the end of the month and a put contract for 2 weeks.
That's all for this article today. See you in the next one.
If you have any questions or strategies you use, you can write them in the comments, and we can develop a strategy together.
#Volatility #september #OptionsTrading #StrategicTrading #WhalesWinning $BTC
$ETH

Hello everyone,

I'm thinking of writing posts with general information like this between my options articles. I want to talk about Non-Fungible Tokens (NFTs), a topic that's also in my area of interest.

I'll start with some classic questions and then give a few examples of why they're valued so highly. You'll be amazed at how limitless the possibilities are.

What are NFTs, which include pixelated images, game characters, and more that sell for millions of dollars?

Fungibility
In economics, "fungibility" means "interchangeability". These are goods, products, or commodities whose individual units are essentially interchangeable. For example, $1 can be exchanged for dimes. But can each of the 13 people in The Last Supper painting be exchanged for the whole picture? This is an example of a Non-Fungible product.

Token
I'd like to start with an interesting fact. ETH is not a token, but everything except ETH is a token. ETH is the native currency of the Ethereum blockchain technology. What's bought and sold is itself, while others are tokens, currencies on the Ethereum network. Also, Fungible Tokens are created on the Ether network thanks to the ERC-20 standard, which is the biggest feature that separates ETH from BTC. While only BTC transfer is possible on the Bitcoin network, you can transfer many tokens on the Ether network and create your money as you wish. This is the biggest factor that increases the use of the network.

Non-Fungible Token
We've learned all the terms, but where does NFT fit in? NFTs could emerge with the ERC-721 network because they needed to have a unique, indivisible feature that couldn't be added to or subtracted from. Like how an item belonging to you in online games like Metin 2 has a special ID, you can't add or remove anything from that item. Sometimes it even burned while trying to improve it. The NFT ERC-721 network is like this. They were unique products that were not similar to each other and were unique on the network until the ERC-1155 standard. This is one of the reasons why NFTs are so important in games. You're going to buy a ship in the game, but that ship needs defense cannons and cannonballs for these cannons. There needs to be more than one of these. That's why the ERC-1155 network comes out, and you can produce as many unique tokens as you want.

NFTs are proof of purchase of an asset. They are not the asset itself. This means you can create an NFT from almost anything. You're not limited to digital objects; you can use a digital object to represent a tangible item. The deed to your house, ownership of a solitaire diamond, a product in a game, and much more...
Blockchain
So what is Blockchain, which forms the basis of all these things and is built upon? It's defined as a peer-to-peer network that works by recording and distributing immutable data. Whatever you do on the blockchain is completely recorded and visible to everyone. That's why NFTs are quite satisfactory in terms of trust. You can see the people who bought and sold the product you're going to buy in its history.
So how can we buy NFTs?
They can be bought on Opensea, Rarible, AtomicMarket, or Binance. On these platforms, a percentage can be set to be given to the producer as a royalty fee for each sale.
The other thing needed to buy NFTs is a wallet. But this is not a real wallet. Cryptocurrencies are stored on the blockchain. There are no electronic and cryptographic coins in exchanges, wallet applications, or hardware wallets called cold wallets.

Just as I wrote before that NFTs are not proof of purchase of an asset, not the asset itself, there is no such thing as cryptocurrency in wallets. Coins are always within the blockchain. The wallets we own carry the right to use these coins on the blockchain. By solving cryptographic codes, it gives the authority to spend the coin as a reward. This is provided by digital signature. A wallet is what holds the signing authority to spend a certain coin.

I'll talk about crypto wallets in more detail later, so I'll end it here for now. However, I think NFT projects will create much more hype soon and we'll see very different things. As someone involved in a few nice projects, I must say I'm excited.
I wish everyone a good weekend.

Hey everyone,
I've previously talked to you about types of option contracts. As a reminder, there are 4 types of contracts:
Buy CallSell CallBuy PutSell Put
In basic terms, these can be called Call (Long) and Put (Short). If you think a product will rise, you buy a Call contract. For you to buy this contract, someone else needs to sell it. That person becomes the Sell Call part of the contract. If you think it'll fall, you buy a Put contract, and again, there needs to be someone selling a Put. To sell Call and Put contracts, you need to hold a certain amount of the spot product. If you have the spot product and want to make money from it, you can use this method. You can see an example of an options trade table here.

To understand this table, let's look at the concepts. First, the left side shows Call contracts, and the right side shows Put contracts. The prices you see in the middle of the table are called Strike prices. This is the agreed price between two parties for contract, not the current price of the product. Expiration Date indicates when the contract ends. Option Premium represents the contract price. The ones marked as At The Money (ATM) show contracts close to the current price.
The gray areas in the top left and bottom right are In The Money (ITM), so their premium will always be higher. What does this mean?
Right now, BTCis at $59,400, and if you want to buy a Call contract at $58,000, the contract will be more expensive because the price is already above the Strike price. For example, when you buy this contract, you'd be $1400 in profit. That's why these contracts increase in price by this profit amount. Let's see what happens when you buy this contract. If BTC is at $80,000 at the end of the contract on December 27, 2024, you'd have the right to buy 1 bitcoin at 58k, making $22,000. As you can see in the table, the 58k contract price is $5,440, your gain is $22k, meaning a net profit of $16,560.
On the Put side, if you buy a contract with a 65k strike price, this bearish contract will be ITM. Because you sold BTC at 65k and the price is 59k. We can say that the 6k profit is directly reflected in the contract price. This price difference is called Intrinsic Value.
Out of The Money (OTM) contracts are those where the strike price is outside the product's price. ETH is currently at $2,660, and if you want to buy a 3k call contract, the price will be much cheaper because the price is far from the contract you're buying. You can see ITM contracts in light gray and OTM ones in dark gray.
By the way, if you've noticed, there are two important factors affecting the contract price. The contract's expiration date and whether the contract is ITM or OTM. Another crucial factor is the contract's delta. To explain with an example, let's say you bought a 62k contract when $BTC was at 60,000, and the price rose to 60,100. There's a $100 increase, if your contract's delta is 0.5, the contract value increases by $50. Delta always starts close to 0 in a call contract and moves towards 1 as the date approaches. In a put contract, it starts close to 0 and goes to -1. Delta always progresses logarithmically. Also, the delta ratio somewhat shows the probability of the price reaching that point. If the delta is 0.25, it can be said that the probability of the price reaching that point is 25%.

So, one of the main questions is how are deltas and contract prices determined? The answer is the Black-Scholes Equation, an option pricing technique first mentioned in the 1973 paper "The Pricing of Options and Corporate Liabilities" by Fischer Black and Myron Scholes. It's the best model made until then and is still used today. They won a Nobel Prize for this paper.
After all this technical information, I'll mention two simple methods for using options and end this post. When trading options, you can use these two models initially according to your trading strategy.

You can trade based on the option contract price. That is, you can buy a 2-4 week contract, determine your thought on the direction the price will go, and trade this as the contract price will increase greatly when there's a movement in that direction. The trade example I showed in my previous post is an example of this.But remember, as the contract date approaches, if it's not ITM, the contract price will decrease even more.As for usage areas, if you have a spot product and think a decline might come, you can create a hedge by buying a put contract. If you open a position in the perp market for this hedge, there will be possibilities like the chance of being stopped out, but there's no such risk in options.Using options directly as a spot product. Let's say you have $10k and you think an uptrend is about to start. Let say $ETH is 2500, you can only buy 4. If you try to split it into other coins, there are other problems. If you take a position from the perpetual market, there are many risks like funding fee, liquidation, being stopped out. Let me explain the situation by making an example directly over the market.If we think ETHwill rise 50% in 2 months, it means it will be $3750. If we buy spot with all our money, we can earn $15k with 50% profit.
The ETH September 27 2600 call contract is $200. If you buy 5, you'll pay $1000. You still have $9000 left. So what happens to these 5 contracts we bought when ETH becomes 3750? 3750-2600=1150. We earn $1150 per contract, $5750 in total. We spent $1000 for the contracts, so the net profit is $4750. When we bought spot, we risked all our money, in options only $1000 was risked and almost the same amount of money was earned. And this is only if it closes on that date at the end of the contract date, if the price reaches there earlier than expected, your contract value may increase even more.

That's all for today, see you in the next post.
#OptionsVsPerp #OptionsTrading #option2trade #MaximizeProfits #Volatility $BNB

Hey everyone,
I'm actually a photographer who's been in the business for 7 years. But lately, I've dived into the trading world. Started with crypto 5 years ago, then forex for the last 2 years, and now I've been doing options trading for about a year. I usually go for medium-term trades, holding perpetual contracts for 2 to 10 days.
Recently, I've been focusing on options trading and trying to learn as much as I can. In 2022, I took a Price Action course from @EfloudTheSurfer. Then in 2023, I completed an options trading course from @TCTA_Wolfe, another guru. Since then, options have become my main interest.
To be honest, I don't think I'm a good trader. It feels like hard work, so to speak do grunt work. The stress gets to me, and it's super frustrating when a profitable trade hits stop-loss only to reach the target right after. Even when my analysis is spot-on, I often mess up the execution or don't get the profits I was hoping for.
At some point, I got fed up with all this. I started thinking that big market makers probably don't trade this way. That's when I saw options. After realizing that the big players and modern trading rely heavily on options, I decided to give it a shot.
Let me break down options for you real quick. Imagine you're selling something, and you're offering someone the right to buy it at a set price in the future.
Here's an example: Let's say I am selling camera and I've got 100 extra cameras, each worth $100. In a month, they'll probably be worth $110 due to inflation and stuff. But I want to sell now because I'm not sure about the market. People might not buy theese stuff if there's an economic downturn, or they might suddenly want cheap hobbies and drive the price up. I don't want to take that risk. So, I make a deal. I sell someone the right to buy a camera for $105 on September 15th, and they pay me $2 for this right. That $2 is called a premium.
The buyer wants the camera anyway, so they're happy to have the option to buy it at $105 instead of $110. I've secured a potential sale and got an extra $2.
On September 15th, if the camera's worth $110, they'll buy it from me. If it drops to $90, they'll forget about our deal, and I keep the $2. Now imagine doing this with all 100 cameras - that's where it gets interesting.
This options thing isn't new. Dutch farmers came up with it way back in the 17th century for tulip bulbs. Now it's used all over, European Union using this all the time. You can use this method to trade anything from live cows to iron.
There are four main ways to trade options: buying calls, buying puts, selling puts, and selling calls. Two of these pay premium and have unlimited profit potential with limited risk, while the other two get premium and have limited profit but unlimited risk. Sounds crazy, right? But get this - the big players often prefer the risky-sounding ones. Of course, the longer the contract date, the higher its price.
Here's why I like options trading: If you're buying options, you can't get liquidated, you don't have to worry about stop-losses, your profit potential is unlimited, and you can't lose more than what you paid. For example, if I think Ethereum will hit $4000 by year-end, I can buy a call option for that. Even if Ethereum crashes to $1500 tomorrow nothing happend to me. If this things don't happend I only lose what I paid for the option. But if it goes above $4000, I'm in the money. Now ETH $2700 and 27 Dec contract price $200. We will see what happend? I will make remember to you this sentence
Let me give you a real example. A few weeks ago, when $ETH was at $3200, I bought an August 9th $2700 Put contract for $5 (0.0015 ETH). If I hadn't sold when it made a 12x return, I would've made $400 on August 9th when ETH was at $2300. That's an 80x return. When ETH dropped to $2100 on August 5th, the contract price hit 0.3 ETH, a 200x return. I was figuratively crazy at that time.

In the options market, you can control positions worth millions with just $1000. Right now, BTC is at $60k and ETH at $2700. To buy 1 $BTC or $ETH outright, you need that much cash. With perpetual trades, you're dealing with funding fees every 8 hours, liquidation risk, stop-losses, stress, and the hassle of carrying positions. Options don't have these issues. You just pay commission when buying or selling, the price can even drop to 0 without affecting you, and if it's at your target price on the expiry date, you profit. Of course always DYOR
Sure, options have their own challenges and quirks, but I think we'll learn them over time.
Anyway, that's it for now. Good luck with your trades!

#options #OptionTrading #OptionTrade #JourneyIntoCrypto #TradeOpportunity