MW Cboe to launch new cash-settled bitcoin options
By Joseph Adinolfi
The launch of contracts tied to a popular bitcoin ETF saw a rush of bullish bets earlier this week
Traders will soon have another option for trading option contracts linked to the price of bitcoin.
Cboe Global Markets announced on Friday that it's planning to launch the first cash-settled index options tied to the pioneering cryptocurrency shortly after the Thanksgiving holiday. The new contracts are expected to begin trading on Dec. 2, according to a press release.
The contracts won't track the price of bitcoin directly. Instead, they will be based on the Cboe Bitcoin U.S. ETF Index. The index was designed by Cboe to track the prices of several spot bitcoin exchange-traded funds on a modified market-cap-weighted basis. The gauge should be closely correlated with the actual spot price of bitcoin, however.
Because they are based on an index rather than an ETF, the options will be cash settled. Existing alternatives only allow delivery of shares of an ETF or a stock like MicroStrategy Inc. $(MSTR.AU)$, long used as a bitcoin proxy by traders.
In addition to the full-sized contracts, Cboe is also launching smaller options tied to a mini version of its spot bitcoin ETF index. They will cover one-tenth of the notional value of their larger siblings.
"Our new suite of options on the Cboe Bitcoin U.S. ETF Index offers a timely and compelling solution for traders to efficiently gain exposure to spot Bitcoin," Rob Hocking, global head of product innovation at Cboe, said in a prepared statement.
"We expect the unique benefits of cash-settlement, combined with the availability of various index sizes and FLEX options, will give customers more flexibility in their trading strategies," he said.
Similar contracts tied to the iShares Bitcoin Trust ETF IBIT launched earlier this week and were met with a rush of trading volume. Data from LSEG showed traders heavily favored bullish call options.
Prior to their launch, traders favored options tied to MicroStrategy, helping them become some of the most actively traded contracts on a single stock.
The price of bitcoin (BTCUSD) appeared to get a boost on the news. It was recently trading up 0.2% on the day at around $98,500, having reversed its declines from earlier.
-Joseph Adinolfi
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(END) Dow Jones Newswires
November 22, 2024 11:21 ET (16:21 GMT)
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