TL;DR

- 15.8B traded in Oct, second highest volume for Paradigm!
- Massive momentum as BTC surges 28%.
- Introducing New UI changes at Paradigm to make your life easier.
- Bybit has released TradeGPT.
- Ram from Lumida Wealth dives into the growing Institutional confidence in crypto.

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ATH Option Volume

October has been an eventful month, filled with significant achievements and exciting developments. Paradigm reached a new pinnacle, recording an all-time high in 24-hour trading volume, totaling an impressive $2.6 billion on October 23rd. This remarkable milestone was largely propelled by the Bitcoin rally, which saw prices peak around $34,000. In total, we achieved $15.8B trading volume, capturing a noteworthy 36% of all crypto options traded this month.

Furthermore, we had the privilege of hosting new and intriguing podcast guests. Among them, we welcomed Ether Chen from Bybit, who shared valuable insights into their innovative TradeGPT tools. We will delve deeper into this exciting discussion later in the newsletter.

With these remarkable achievements and insightful discussions, let's now delve into the latest updates, market flows, and insights from the world of Paradigm.

Massive Momentum

October has consistently delivered strong monthly returns for Bitcoin, and this year was no exception. Paradigm experienced an astonishing +96% month-over-month increase in options volume during this 'Oct-Up-ber' rally.

The month concluded with major cryptocurrencies showing remarkable performance, with Bitcoin (BTC) surging by +28.5% and Ethereum (ETH) by +7%. Notably, cryptocurrencies continued to demonstrate a short-term decoupling from equities, as the S&P 500 index declined by -2.8%.

The massive momentum in October was initiated by certain news outlets sharing unconfirmed information about the approval of a Bitcoin spot ETF. This surge was further fueled by the DTCC listing of Blackrock’s TICKER:IBTC and Invesco’s TICKER:BTCO under the DTCC’s 'exchange-traded-funds' section. It's important to clarify that these listings do not indicate any formal approval, and they should not be considered as confirmation.

Following the false BTC spot ETF confirmation reports, Bitcoin's price briefly spiked from 27k to 30k before settling back down to around 28.5k. Implied volatilities for Bitcoin ATMs with expiries ranging from 7 to 90 days retreated to below 40, while ATM volatilities for the same expiries remained around 60v, indicating an increase of +20 vols.

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All eyes have been on Bitcoin’s volumes and activities due to the hot topic of awaiting an ETF approval. Let's dive deeper into this month’s Bitcoin flows:

Top 5 BTC Structures on Paradigm:
1. 4006x 29-Dec-23 34000/40000 Call Spread sold
2. 2330x 24-Nov-23 30000 Call sold
3. 2300x 24-Nov-23 31000 Call sold
4. 2073x 3-Nov-23 29000 / 29-Dec-23 34000 Call Calendar bought
5. 1902x 27-Oct-23 31000 Call sold

During the past month, as the spot price was rallying to around 30k, we observed significant trading activity in the options market. Notably, there were substantial volumes of October and November calls being sold to close positions, both through outright sales and call calendar spreads.

Around the 34k spot level, there was a notable influx of traders selling December 34k/40k call spreads. It's worth mentioning that there was already a significant open interest in December 40k calls, as we discussed in a previous edition of TBP.

These recent December call spread transactions, specifically the 34k/40k spreads, appear to be part of a strategy to roll positions to higher strike prices. A closer look at AmberData's open interest changes reveals that the open interest for December 40k calls has increased, while open interest for December 34k calls is decreasing.

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Ethereum options are still centering around the theme of the looming underwriter. Deribit’s new margin requirements paired with the Bitcoin led gamma squeeze had the counterparty rushing to cover his current shorts, we saw (500?)xxxk vega bought to close at 4vols above market price. This flow paved the way for some counterparts to take long positions via outrights or call calendars. Notable ETH options activity below:

20000x 27-Oct-23 1650 / 24-Nov-23 (tied) 1650 Call Calendar bought
18500x 27-Oct-23 1700 / 24-Nov-23 1700 Call Calendar bought
16500x 24-Nov-23 1650 Call sold
16250x 29-Dec-23 1900 Call bought
16000x 27-Oct-23 1700 Call bought

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Screen BBO Offset Highlight

Precision in every stitch - The better-than-screen price offset on RFQ and OB now shines brighter, making your trading experience even smoother.

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Strategy Pricing for Custom Structures

UI users may now key the overall Strategy Price for a Custom Structure - Paradigm will auto-calculate the leg prices for you behind the scenes.

October Content Highlights

Bybit's TradeGPT is a GameChanger for Traders

In this video, Ethers provides valuable insights into the intersection of AI and crypto trading. The discussion delves into the Trade CBT Plug-In, an AI tool, and offers a live demo showcasing its capabilities. We also explore Structured products and their relationship with AI, with a deep dive into these products' mechanics.

Watch Episode Here

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Crypto Options Markets Reveals Institutional Confidence w/ Ram Ahluwalia

In this episode, Ram Ahluwalia CEO of Lumida Wealth explores ETF’s, various option plays, and sheds light on long-term secular trends traders should consider. We also discuss watching large flows and downside risks, particularly the "sell the news" phenomenon.

Watch Episode Here

Stay informed and engaged with us through our weekly "The Big Picture" podcast and "Paradigm Edge" Telegram channel — your go-to resources for navigating this ever-changing crypto derivatives landscape.

Thanks for taking the time to read our Monthly Brief.

Reach out to your rep for details on what we’re building and make sure you ​​follow us on Telegram, Twitter, LinkedIn, and YouTube.

Sincerely,
The Paradigm Team 💜