🧵Trading Flat Curves: $ETH Volatility & the Rise of the 1x2 $ETH's vol surface from July to September 2025 has flattened. Implied volatility (IV) is sticky — especially around the 1W–1M tenor. But the relationship with realized vol (RV) is mixed.

1/ This creates a nuanced regime where some parts of the curve are overpricing realized moves, while others underprice them. 2/ It’s not a clean dislocation — it’s a fragmented one. 3/ Still, it opens the door for expressive structures.

2/ Here’s where it gets even more interesting: Vol-of-vol (VoV) — the volatility of implied volatility — has surged. This isn’t just noise. It’s a sign of option repricing risk, demand-supply imbalance, and positioning stress.

3/ What causes elevated VoV? No natural sellers (e.g., no call overwriting) Altcoin MM flows: Selling $ETH gamma (<1m) to hedge long altcoin gamma ➡️ When $ETH moves, they scramble to cover → spot jumps, vol spikes.

4/ So what can you do as a trader in this regime? With the volatility curve flat, expectations wobbling, and VoV high… You reach for structure. Specifically: the 1x2.

5/ The 1x2 is simple but powerful: Sell 1 ATM Call Buy 2 OTM Calls (25Δ) This gives you: ✅ Cheap convexity ✅ Exposure to topside surprise ✅ Theta efficiency if market chops sideways

6/ In plain English: You're betting $ETH might pop hard to the upside... …but you’re not paying much for it. If $ETH stays in range, your theta bleed is minimal. If it rips, you profit with convexity on convexity.

7/ Why is this so timely now? Curve is flat → no term premium IV is still rich vs RV → option sellers are rewarded VoV is high → market may violently reprice Perfect storm for expressive, asymmetric structures.

8/ We’re in a rare moment where crypto option markets are pricing confusion. 1x2s are a clean way to trade vol dislocation, skew, and sentiment swing in one package.

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