BlackRock Launches Options Trading for Bitcoin ETF with $1.9 Billion Exposure
BlackRock has launched options trading for its Bitcoin ETF, the iShares Bitcoin Trust (IBIT), following regulatory approval in January. The ETF has garnered significant inflows since its inception.
Increased Liquidity and Reduced Volatility
The introduction of options trading on the $43 billion iShares Bitcoin Trust is expected to reduce volatility and expand Bitcoin's investor base, according to Bloomberg. Alex Thorn from Galaxy Digital indicated that broader ownership of Bitcoin could lead to decreased volatility, allowing for larger position sizes. A reduction in volatility may encourage a shift in investor sentiment, viewing Bitcoin as a legitimate asset rather than a speculative investment. Options will also facilitate better hedging for institutions, enhancing liquidity and potentially affecting retail trading during bullish market conditions.
Call Options Dominate BlackRock’s Bitcoin ETF on Day 1
On the first day of options trading, total notional exposure for IBIT reached nearly $1.9 billion across 354,000 contracts. Of these, 289,000 were calls and 65,000 were puts, resulting in a bullish call-to-put ratio of 4.4:1. This interest in call options contributed to Bitcoin reaching new all-time highs of $94,000 during trading. Analysts noted that many contracts are bullish, particularly the December 20 call option, which implies expectations for Bitcoin to exceed $180,000 by that date. The put/call volume ratio of 0.17 indicates strong bullish sentiment compared to other ETFs, such as the SPDR S&P 500 ETF (SPY) with a ratio of 1.1.
Marty Party noted that options on the iShares Bitcoin Trust will settle in actual Bitcoin, providing investors direct exposure to BTC price movements without needing to use crypto exchanges.
The leading digital asset is currently trading at $91,580, reflecting a 4% increase over the week following today's bullish movement.
Featured image from DALL-E, chart from TradingView.com