Bitcoin options reveal new insights into market volatility and risk management.
Bitcoin options provide a new way to manage risk in the volatile cryptocurrency market. By studying short-term Bitcoin options, researchers found that they show a volatility skew, similar to other financial assets. They used numerical methods to estimate the implied volatility of Bitcoin options and found that the Newton Raphson method is faster than the Bisection method. This research sheds light on how Bitcoin options behave and how their implied volatility can be accurately estimated.