Gate Research Institute: Market downside risks have not yet been cleared, and funds are flowing into Ethereum options to pursue long volatility strategies

Options Market Dynamics

Latest data shows that BTC implied volatility (IV) remains at 38%, and ETH IV stays at 54%. Among them, ETH IV has fallen to a very low level of 1.6% percentile over the past year, indicating that the options market is extremely cautious about short-term price fluctuations.

Over the past week, the 25-Delta Skew for BTC and ETH has generally remained in the negative territory, showing that demand for downside protection still dominates. During the week, short-term Skew (7D, 14D) experienced a noticeable steepening and rapid decline, once approaching -7~-8 vol, reflecting a phase of concentrated risk aversion. Subsequently, Skew gradually recovered. Medium to long-term maturities (30D, 60D, 90D, 180D) exhibited relatively mild volatility, generally staying in the -3~-4 vol range, indicating that medium to long-term risk pricing remains stable, with panic mainly concentrated in the short end.

This week, ETH’s actual volatility surged rapidly after January 22 and remained above 60%, while the 7D ATM implied volatility initially declined and then only mildly recovered, remaining consistently below RV, resulting in a negative VRP for most of the week. This suggests that the options market is pricing short-term realized volatility cautiously, reducing the cost-effectiveness of volatility selling strategies, while strategies that buy volatility or have Gamma exposure performed relatively better this week.

Block Trade Structure

On Friday, approximately $9.8 billion worth of BTC and ETH options will settle. In the past 24 hours, block trades in BTC and ETH options have mainly been bearish spreads. The largest block trades are as follows:

• BTC: Sold BTC-30JAN26-85000-P, approximately 500 BTC traded, with a net premium income of about $180,000.
• ETH: Bought ETH-6FEB26-3150-C, approximately 2,000 ETH traded, with a net premium expenditure of about $90,000.

Options portfolio strategies can be executed using the combination order strategy tool launched on the Gate platform.

Platform Update

Gate has launched a convenient options trading tool — the combination strategy order, to help users respond more efficiently to different market conditions, such as narrow-range oscillations, slow gains, or slow declines. This feature covers many common multi-leg options strategies, including spreads, straddles, and more. Through combination strategy orders, users can create multi-leg options positions in a single operation, with an intuitive display of overall costs, profit and loss structure (PnL), and risk exposure. This allows for efficient construction and management of multi-leg options strategies without placing individual leg orders, significantly reducing operational complexity and improving trading efficiency.

Combination strategy product description: https://www.gate.com/zh/help/other/combinationstrategies/49208