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April 28, 2020

When should you trade MOVE options?

The price and value of a MOVE contract reflect expectations about the volatility of the asset. For example, if you believe that the price of the underlying asset – Bitcoin or Ethereum –  will go either up or down, you can long the contract. 

On the contrary, if you believe that the underlying asset price will be relatively stable, you can short the MOVE contract. In this trade, you are short volatility. In this way, MOVE contracts on Delta allow you to trade cryptocurrency volatility.

MOVE contracts are useful during times of high market uncertainty with large price swings in either direction. They allow you to profit off of volatility without you having to predict the direction of the price change. As an example, take the FEDs most recent $700 billion injection into the US stock market. Uncertainty surrounded this event and it was difficult to tell whether the news would be interpreted positively or negatively. In a case like this, a MOVE Contract allows you to speculate on the upcoming volatility whilst disregarding the direction of the move.

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