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Spot Bitcoin ETF options set to debut this week following OCC approval, analysts predict Gino Matos · 28 mins ago · 2 min read
Bitwise's head of alpha strategies stated that options trading on Bitcoin ETFs could be the “most extraordinary upside ‘vol of vol’ in financial history.”
2 min read
Updated: Nov. 18, 2024 at 8:15 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The Office of the Comptroller of the Currency (OCC) stated in a Nov. 18 memo that it is “preparing for the clearance, settlement, and risk management” of options trading on BlackRock’s spot exchange-traded fund (ETF) iShares Bitcoin Trust (IBIT).
As a result, analysts predict these products could start trading within this week.
Alison Hennessy, head of ETP listings at Nasdaq, said during an appearance on Bloomberg that the exchange intends to list and trade options on IBIT “as soon as tomorrow.”
Although she did not confirm that options trading on the spot Bitcoin (BTC) ETFs will start on Nov. 19, Henessy added that the listing process after OCC approval is relatively quick, often happening within a few days.
Despite the approval being specifically for IBIT, Bloomberg ETF analyst James Seyffart said that other Bitcoin ETFs could start seeing options trading this week as well.
The last step
The OCC’s statement came after the Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk advised that options on spot commodity ETFs are under the US Securities and Exchange Commission (SEC) jurisdiction.
The CFTC advice is the second of three steps. The first step was the SEC approval of the trading of options on IBIT on Sept. 23. The OCC statement regarding preparations is the final step, clearing the road for options on spot Bitcoin ETFs.
As a result, a new wave of capital could flow to spot Bitcoin ETFs, adding to the already stellar performance these products displayed this year.
Liquidity boost
An options contract is a derivative that allows two parties to agree to buy or sell an asset at a specific price and within a particular time frame. It is a tool commonly used by institutional investors to hedge their spot market positions.
In September, Bloomberg senior ETF analyst Eric Balchunas stated that trading options in spot Bitcoin ETFs will add a layer of sophistication to these products and attract more “big fish.”
Meanwhile, Jeffrey Park, head of alpha strategies at Bitwise, recently stated that the approval of options on spot Bitcoin ETFs is the “most extraordinary upside ‘vol of vol’ in financial history.”
Park explained that trading Bitcoin ETF options in an environment regulated by the OCC enhances BTC’s financial utility by providing new avenues for leverage and investment strategies.
Bitcoin’s unique properties — such as its fixed supply and distinctive volatility profile — position it for potentially explosive growth in this new landscape.
He concluded:
“In summary, the Bitcoin ETF options market is the first time the financial world will see regulated leverage on a perpetual commodity that is truly supply-constrained. Things will likely get wild. In such scenarios, regulated markets may shut down.”
