The US Securities and Exchange Commission (SEC) has approved proposals from two different exchanges in order to list and trade options on several bitcoin ETFs, thus helping with further expanding the range of crypto-focused investment products for US based investors.
As mentioned in the SEC filings, the Cboe Exchange has obtained approval to offer options on the Fidelity Wise Origin Bitcoin Fund (FBTC) as well as the ARK 21Shares Bitcoin ETF (ARKB).
And NYSE American was given permission to list options on the Grayscale Bitcoin Trust ETF (GBTC), Grayscale Bitcoin Mini Trust (BTC), Bitwise Bitcoin ETF (BITB).
As covered, the trading of spot bitcoin ETFs officially started in January of 2024 with the SEC’s approval.
Notably, this latest update comes after the regulatory authority’s previous announcement to allow options trading on BlackRock’s iShares Bitcoin Trust (IBIT), which is currently said to be the largest spot bitcoin ETF.
The Cboe and NYSE American are to implement fairly conservative position limits of 25,000 contracts on the same side of the market for each bitcoin ETF option, as mentioned in the fillings.
As explained in the update, this limit is said to be lower than those for various other ETF options, indicating a more reserved approach to such products.
The launch of options on bitcoin ETFs offers investors important tools to manage risk and boost returns in their crypto-focused investment portfolios.
Options enable professional and experienced traders to speculate on future price movements or potentially hedge current positions without being required to actually maintain ownership of the underlying assets.
Cboe and NYSE American noted in their respective filing that current surveillance procedures may apply to the bitcoin ETF options.
The exchanges are said to members of the Intermarket Surveillance Group, enabling information sharing to identify cases of market manipulation or other abusive financial market activities. The exchanges also offer data confirming the liquidity as well as the overall trading volume of the underlying BTC ETFs.
NYSE American’s filing noted that as of August 30, 2024, GBTC has more than 284 million shares outstanding and a market cap of more than $13.4 billion.
GBTC is reported to have almost 367 million shares outstanding and BITB had around 68.7 million shares outstanding.
As stated in Cboe’s filing, FBTC had more than 201 million shares outstanding as of August this year, with a 6-month trading volume of over 1.1 billion shares. And ARKB is reported to have around 45.5 million shares outstanding and a 6-month trading volume of more than 297 million shares.
The exchanges also emphasized that their rules requiring customer disclosures and suitability standards should be applicable to such options products, with the goal to protect investors.