Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.
Crypto derivatives protocol Volmex Finance unveiled a new implied volatility index for programmable blockchain Solana's SOL token on Tuesday. The index is a way to measure expected price swings in the world's fifth-largest cryptocurrency by market value.
The SVIV index measures forward-looking 14-day expected volatility in SOL, Volmex said in an email to CoinDesk, adding traders can track the same to see the degree of potential SOL price swings over the following two weeks. Volmex said it would eventually debut longer-duration SOL implied volatility indices, including the widely-tracked 30-day gauge and derivatives linked to the same, allowing market participants to place bets on volatility.
The so-called"vol trading" involves profiting from the degree of price fluctuations rather than the price direction. Traders use tools like options tied to the underlying asset and futures tied to volatility indices to bet on or hedge against volatility. Both indices gauge the 30-day expected volatility and have been adopted by institutions. Early this year, principal trading firm Arbelos Ltd and B2C2, an institutional liquidity provider for digital assets,in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence.
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