Definition ∞ Volatility spreads refer to the difference between implied volatility and historical volatility, or between different measures of expected price fluctuations. These spreads offer insights into market sentiment and expectations about future price swings. Analyzing them can help traders and investors gauge risk and potential opportunities. They are key indicators in derivative markets.
Context ∞ Volatility spreads are a frequent topic in news related to options trading and risk assessment in digital asset markets. Reports often discuss how widening or narrowing spreads for Bitcoin or Ethereum options signal changes in investor expectations regarding future price movements. Understanding these dynamics is crucial for interpreting market sentiment and hedging strategies.
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