Crypto Traders Applaud Deribit’s Latest Bitcoin and Ether Options Linked to U.S. Elections

Deribit recently unveiled new options designed to assist traders in effectively managing their positions in bitcoin (BTC) and ether (ETH) following the U.S. presidential elections on Nov. 4. These options, expiring four days after the elections, are seen as crucial tools for defining risk and safeguarding capital amidst the anticipated market volatility surrounding this significant event.

The introduction of these election expiry options linked to leading cryptocurrencies like bitcoin and ether has received a warm reception from traders who view them as essential instruments for navigating the uncertainties associated with the upcoming elections. According to Jeff Anderson, a senior trader at STS Digital, the U.S. election carries substantial implications for risk assets, including cryptocurrencies, and is expected to have a binary impact on fiscal policies and financial stability. As a result, options play a vital role in hedging against this uncertainty, making it a natural decision for Deribit to incorporate this timeframe.

The impending U.S. election holds particular significance for the crypto market, as Republican candidate Donald Trump’s recent endorsement of digital assets sets him apart from his opponent, Joe Biden. Despite the absence of detailed crypto regulatory proposals from Trump, his outreach to bitcoin miners and planned participation in an upcoming Nashville conference have garnered support from the industry, positioning BTC and the broader market as a reflection of his potential presidency.

Given the potential for heightened price volatility in BTC and ETH leading up to and following the elections, investors are increasingly turning to derivatives such as options to shield their portfolios. Options provide a form of insurance against both bullish and bearish price movements in the underlying asset, with call options guarding against upside volatility and put options offering protection against price declines.

Deribit’s election expiry options are set to launch on July 18 at 8:00 UTC and will expire on Nov. 8, three days after the election results are announced on Nov. 5. Each option contract on Deribit represents either one BTC or ETH, offering traders the opportunity to strategically position themselves before, during, and after the elections with a buffer period post-results.

These options are viewed as a strategic move by Deribit, enabling traders to leverage their positions and hedge against market exposure concurrently. Traditional market traders commonly utilize options to manage their exposure during uncertain events like U.S. elections or corporate earnings reports, where outcomes are unpredictable. Strategies such as buying a straddle, which involves purchasing both a put and call option at the same strike price with an expiration date post-event, are commonly employed to capitalize on potential market movements following significant events.

Overall, the introduction of election expiry options by Deribit represents a proactive step in empowering traders to navigate the market dynamics surrounding the U.S. elections and underscores the increasing significance of options in managing crypto portfolios during periods of heightened uncertainty.