Skew, the distortion of implied volatility between puts and calls with equivalent deltas is a fundamental parameter in derivatives trading to gauge market sentiment.
Traditionally, in equity derivatives, skew is positive (implied volatility for puts is higher than for calls with equivalent deltas). History has shown us that downside moves tend to be more sudden and brutal than upside ones. Unfortunately, Black and Scholes model did not account for that as the model assumed constant volatility and log-normal distributions of underlying asset returns. After the 1987 crash and the reassessment of fat-tail probabilities, the concept of option smile appeared. Demand…
In terms of crypto market infrastructure, the hot topic for 2018 was custody, as lending was for 2019. Meanwhile, 2020 seems to be the year of derivatives. Volumes are growing, product offerings are expanding, and participants are getting more professional. We believe the success of crypto derivatives markets mark a definitive step towards maturity for digital assets.
A Brief History of Crypto Derivatives Exchanges
After the creation of the first crypto exchanges for spot trading in 2010, and their rapid expansion in the following years, it was only matter of time before more complex trading instruments would get offered. …
A rare event, expected to take place around the 12th of May
What’s the Halving?
In order to limit the number of Bitcoins to 21 million, its underlying code has been designed by its creator (an anonymous character under the pseudonym of Satoshi Nakamoto) so that the supply is forever limited. This rule is fixed in the sense that to be modified it would require an incredible coordination of the Bitcoin network. Several clues indicate that its creation is closely linked to the 2008 crisis that kickstarted a global easing of central banks’ monetary policies, with almost unlimited money supply.
Originally published on 24 November 2018
Blockchain institutions have two jobs: serve our customers, and keep the keys safe. As an industry, we struggle to keep the keys safe.
This paper reviews the problems in the current marketplace and discusses what responsible crypto- asset custodians require from a solution.
We then present Drawbridge, our custody toolkit which we are releasing under a free (MIT) license. …
Originally published 13 February, 2019
We provide a summary of service levels in the Covario architecture, followed by an explanation of the architecture’s performance.
Performance can be broadly broken into latency, scalability, and reliability. The three are interconnected, and we explain all three.
2 Summary: Service Levels
Covario Prime Brokerage is an in-house built platform that provides best-in-class digital asset services.