Cboe Launches First Cash-Settled Bitcoin ETF Options on December 2
Cboe, a derivatives exchange for digital assets and securities trading, will launch the first cash-settled index options linked to Bitcoin's (BTC) spot price on December 2. These options will be based on the Cboe Bitcoin ETF Index, which tracks a selection of US-listed spot Bitcoin exchange-traded funds.
Implications for Traders
The introduction of these options follows Nasdaq's recent listing of spot Bitcoin ETF options, allowing US investors to use derivatives for speculation or hedging against BTC’s price movements. Alex Thorn from Galaxy Digital stated that reducing Bitcoin's volatility could change investor perceptions significantly. Cash-settled options will offer institutions tools to hedge their positions, potentially boosting overall market liquidity.
This increase in options trading may also affect retail trading behavior, particularly in bullish markets. Bitcoin's price reached an all-time high of $99,300, partly due to heightened trading activity and optimism. The new cash-settled options could drive Bitcoin over the $100,000 mark, given recent buying pressure.
Cboe's options on the Bitcoin ETF Index will allow participants to gain exposure to spot Bitcoin ETFs and Bitcoin itself. The cash-settled structure simplifies resolution of positions at expiration. The options will feature “European-style exercise,” which permits exercise only on the expiration date, reducing risks related to early assignment.
Cboe Mini Bitcoin ETF Options
Alongside standard-sized index options, Cboe plans to introduce Cboe Mini Bitcoin ETF Index options (Ticker: MBTX), valued at one-tenth the notional value of standard options. Additionally, Cboe will provide cash-settled FLEX options for both standard and mini index options. FLEX options allow traders to customize contract terms, enhancing flexibility in trading strategies and accommodating larger positions than typical standard options contracts.
Rob Hocking, Cboe's Global Head of Product Innovation, emphasized the advantages of cash settlement and a variety of index sizes, appealing to institutional and retail participants wishing to hedge or capitalize on Bitcoin's price movements without holding the asset directly.
Cboe currently lists cash-settled Bitcoin and Ether margin futures on Cboe Digital Exchange, with plans to transition these products to the Cboe Futures Exchange in the first half of 2025, pending regulatory approval. Cboe's BZX Equities Exchange leads the US market for spot crypto ETFs, holding a majority share of available Bitcoin and Ethereum ETFs.
As of now, Bitcoin is trading at $99,240.
Featured image from DALL-E, chart from TradingView.com.