How does the option ratio affect the price movement of digital currencies?

1 answers

• Dec 15, 2021 · 3 years ago
  The option ratio is a key factor that influences the price movement of digital currencies. It reflects the sentiment and expectations of traders and investors in the market. When the option ratio is high, it indicates that there is a greater demand for call options, which are contracts that give the holder the right to buy the digital currency at a specific price within a certain timeframe. This higher demand for call options suggests a bullish sentiment, as traders anticipate an increase in the price of the digital currency. Conversely, when the option ratio is low, it suggests a higher demand for put options, which are contracts that give the holder the right to sell the digital currency at a specific price within a certain timeframe. This higher demand for put options indicates a bearish sentiment, as traders expect a decrease in the price of the digital currency. Therefore, monitoring the option ratio can provide valuable insights into the potential price movements of digital currencies.
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