The Rise of Crypto Options and Structured Products
Retail dominance of crypto trading and the lack of institutional infrastructure and participation has led to imbalance in the structure of the options market. Here’s how we can address these challenges, says Abdulla Kanoo, Co-Founder of ARP Digital.
The crypto options space, primarily on the retail side, has had stints of exponential momentum starting from July 2021 until June 2022, followed by a decimation in vault TVL and absolute returns during periods of pronounced realized volatility. The retail consensus from options and structured products vaults, which have employed systematic short volatility strategies is far from good.
Options and structured products are naturally complex and require at least quasi-active management. While the demand for convexity increases, and 0DTE options rise again in the retail consciousness, institutional providers have been quietly advancing the required infrastructure for the non-retail investor base to get involved. These types of structured products give investors a breadth of crypto payoffs while also solving for degrees of customization.