Essentially all new technology investments are options on a new, breakthrough technology.
All financial options depend heavily on volatility or the standard deviation for their pricing. The problem is, the movements in the option price are in the same direction as the volatility.
Which in plain sight is counterintuitive. Better managerial decisions have to be associated with higher option price. Which is usually the case.
However, negative management decisions, which increase the volatility of the underlying technology also illicit higher option prices for the underlying technology. Which is obviously wrong.
The recent negative volatility in Bitcoin, crypto brings higher option prices for Bitcoin, crypto, which is counterintuitive.
In short, Bitcoin, cryptocurrencies are undervalued currently, while options on Bitcoin, cryptocurrencies are overvalued in the short-term.
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