GM tradoooooors! 🛸

Welcome to our newsletter, SDX Weekly, where we bring you bite-sized options alpha and insights!

What’s happening in the market?

BTC

After dumping almost 10% at the start of last week, $BTC traded sideways between $64,500 and $67,000 before breaking towards the upside over the weekend. Earlier today, BTC closed above the previous range high at $71,780 after a strong move up.

Key Levels to Watch:
Support: $68,300
Resistance: $71,500 (currently at resistance) and $74,000

ETH

Spending the majority of last week falling 12%, ETH caught a bid at $3,200, before retesting support-turned-resistance at $3,400. Finding supply in that area too strong, price fell back down towards that $3,200 level before bouncing off that area again.

Earlier today, just like BTC, ETH broke and closed above its previous range high of $3,440, marking a 7% move up on Monday.

Key Levels to Watch:
Support: $3,400
Resistance: $3,680

SOL

Following in the footsteps of BTC and ETH, SOL found itself in an 18% dump last week, before finding support at $168. Currently trading at $184, SOL spent the better part of Monday moving up 5%.

Key Levels to Watch:
Support: $168
Resistance: $192

Options Market Update

BTC

The BTC ATM Implied Volatility chart indicates a sharp divergence between the 1-week IV (red) and the 1-month IV (blue). The 1-week IV's dramatic rise suggests traders are bracing for immediate turbulence in the lead-up to the BTC halving event, anticipating significant price movements.

In contrast, the 1-month IV's relative stability suggests a consensus that post-halving, the market expects to stabilize as new supply dynamics are absorbed by the market.

ETH

Today's ETH 25 Delta skew chart indicates a divergence between the 7-day and 30-day skews, highlighting contrasting market sentiment at different time frames.

The 1-week skew's significant volatility suggests trader sensitivity to short-term factors, with recent price action around the $3,200 level possibly serving as a catalyst.

Meanwhile, the 1-month skew's relative stability may be indicative of a market consensus forming around ETH in the mid-term, especially as the price stabilizes after testing the $3,400 resistance level.

In other news…

1. Paradigm reported key option flows for BTC and ETH last week.

Here are the top 3 structures for BTC:

• 1100x 26-APR-24 66000/80000 Bullish Risk Reversal (sold)

• 1000x 26-APR-24 64000/71000 Bearish Risk Reversal (sold)

• 550x 12-APR-24 70000 Call (bought)

Here are the top 3 structures for ETH:

• 8500x 26-APR-24 3100/2600 Put Spread (sold)

• 6750x 12-APR-24 3300 Call (sold)

• 6250x 19-APR-24 3300 Call (sold)

2. Deribit Implied Volatility Index (DVOL) for BTC and ETH rose sharply to 85.19 and 87.49, respectively.

3. Treehouse Finance reports that the 30-day 25-delta skew (C-P) for BTC and ETH increased to 4.79% and 0.79%, respectively.

Trade Idea of the Week: 12APR-190/250 Long Call Spread

With SOL finding bids earlier today, here’s a potential long volatility setup for the bulls.

Our spotlight this week falls on the 12APR-$190/250 Call Spread option, currently trading at an IV of 159%. Despite an elevated IV, this setup could prove profitable if the market does find its way back up to the $190—a key liquidity zone.

Potential Outcomes:

1. Best Case: SOL rallies above $250, making our call spread well in the money. Traders stand to make $60 per contract, excluding the net premium paid.

2. Moderate Case: If SOL fluctuates between $190 and $250, profit increases linearly with SOL’s price within this range but is limited by the cost of entering the spread.

3. Worst Case: If SOL drops below $190, both call options expire worthless. In this scenario, the loss is limited to the net premium paid for the spread, which is ~$8 per contract at time of writing.

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