What is the Context of Options Bias?

In the cryptocurrency derivatives market, discussions about options bias often relate to the pricing discrepancies observed in options contracts for digital assets. Key debates involve whether this bias is driven by market sentiment, the liquidity of underlying assets, or specific risk premia demanded by option writers. Future developments to monitor include the impact of institutional participation and the refinement of volatility modeling techniques in this nascent market.

Options Bias ∞ Area

Options Bias

Definition

Options bias describes a systematic tendency in the pricing or trading of financial options that deviates from theoretical expectations. This can manifest as implied volatilities that are consistently higher or lower than predicted, or as preferential trading in certain option types. It reflects market participant behavior or structural characteristics that influence option valuations.

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