**Why is Deribit Reporting High Trading Volume for Put Options?**

On April 19, it was reported that according to the transaction data of Deribit, the crypto options trading platform, 65.5% of the transaction volume of Deribit’s options in the past 7 days was to buy put option, and 32.8% was to sell put option; The trading volume of call option only accounts for 2%.

Data: In recent 7 days, the trading volume of call option on Deribit platform only accounted for about 2% of the total trading volume

As reported on April 19th, Deribit’s transaction data revealed that over the past seven days, 65.5% of the transaction volume for its options market consisted of buying put options, while only 2% of the trading volume was in call options. This trend has raised concerns among crypto enthusiasts and traders, leaving many to question what may have caused such a substantial surge in put-option trading.

**What are Put Options?**

Put options refer to contracts that give the holder the right but not the obligation to sell an underlying asset at a given price within a specific timeframe. Such contracts represent a bearish sentiment, indicating that the buyer of such options expects the underlying asset’s price to fall below the agreed-upon price, allowing them to profit by selling the asset at a higher price.

**Reasons for Increased Put Option Trading Volume**

There could be numerous reasons behind the recent surge in trading volume for put options on Deribit. Firstly, it could be a result of a correction in the crypto market. Typically, investors in the crypto market rely on put options as a hedging strategy to protect their gains from a potential correction.
Moreover, the introduction of new trading bots and high-frequency trading algorithms may have also contributed to this trend. These computer programs are designed to react rapidly to market changes, potentially causing sudden market changes that favor put options.
Another plausible explanation for the increased put option trading may be a result of institutional investors investing in the crypto market. These investors generally focus on the long term and often use hedging strategies to protect their assets against potential market downside risks.

**What is the Potential Impact of This Trend?**

While the surge in put option trading on Deribit does not necessarily mean that the crypto market is bound to undergo a significant correction, such trends could indicate a shift in market sentiment, leading to an increase in volatility.
Such market fluctuations could be harmful to new investors, leading to the potential for significant losses for those with limited market experience or those with high-risk tolerance.
However, for more experienced investors, the current trend in put option trading could present an opportunity for creating profitable trading strategies by taking advantage of the swings in the market.

**Conclusion**

Overall, the surge in put option trading on Deribit could be a result of numerous factors, including the introduction of new high-frequency trading algorithms, a correction in the crypto market, and institutional investors using hedging strategies.
While this trend could lead to market volatility and be detrimental for inexperienced traders, it presents opportunities for experienced investors to create profitable trading strategies.

**FAQs**

**Q1. What are some common hedging strategies used in the crypto market?**
A1. Some commonly used hedging strategies in the crypto market include the use of options contracts, futures contracts, and perpetual swaps.
**Q2. How can you protect yourself against potential losses in the crypto market?**
A2. One of the most effective ways to protect oneself from potential losses in the crypto market is by implementing a diversified portfolio, reducing the chances of significant losses in a single asset.
**Q3. How should novice investors respond to the recent trend in put option trading volume?**
A3. For novice investors, it is advisable to tread carefully and seek professional advice before making any significant investment decisions. It is also vital to ensure that one has sufficient market experience and risk tolerance before investing in high-risk assets such as cryptocurrencies.