In January, cryptocurrency enthusiasts hailed a milestone event when the Security and Exchange Commission (SEC) approved the purchase and sale of spot Bitcoin exchange traded funds (ETFs). With that, it was only a matter of time before U.S. regulators would permit the trade of derivatives of those funds.
And so, it came to pass: in November, market participants were able to trade options on spot Bitcoin ETFs from the likes of BlackRock, Fidelity, and ARK Invest. Thus, a range of option strategies from covered calls to protective puts were suddenly available for a variety of Bitcoin-tracking funds.
Binance CEO Richard Teng commented on the effects of options trading on crypto markets, “Options trading is poised to enhance liquidity in the crypto ecosystem by providing investors with additional tools for hedging and speculation. Institutional players, who often seek sophisticated risk-management instruments, may find options particularly appealing. By offering new mechanisms to manage exposure, options trading could attract long-term capital, increasing market stability and broadening participation beyond retail investors.”
It’s exciting, sometimes useful to have more trading options, but this doesn’t guarantee a successful outcome or even a positive initial response from the markets. As it turns out, however, these newly available derivatives are largely a welcome addition to the arsenal of today’s sophisticated Bitcoin and Bitcoin-adjacent traders.
The floodgates opened on Tuesday, November 18, when option trading commenced on the iShares Bitcoin Trust ETF (NASDAQ:IBIT). Thus, just as a BlackRock fund kicked off the spot Bitcoin ETF trading tidal wave in January, derivatives of the same fund opened a veritable Pandora’s Box of cryptocurrency derivatives trading.
It’s no exaggeration to claim a blockbuster hit with this group of options, at least initially. As reported by The Wall Street Journal, around $19 billion worth of iShares Bitcoin Trust ETF changed hands on the first day they were available for buying and selling. That’s just for the BlackRock fund’s calls and puts, by the way, and doesn’t include options on the funds of Fidelity and ARK Invest that became available at around the same time.
Looking at the volume figures from another angle, roughly 354,000 IBIT option contracts were traded that first day, broken down into approximately 289,000 call options and 65,000 put options. This suggests that, at that time, sentiment regarding the future Bitcoin price was largely bullish.
Bloomberg’s ETF analysts called these figures “unheard of for day one,” but there may still be room to grow. As a basis for comparison, $5 billion worth of SPDR Gold Shares ETF (NYSEARCA:GLD) options traded hands that same day, November 18.
To that end, BRN lead analyst Valentin Fournier deemed the launch of options trading on BlackRock’s spot Bitcoin ETF a “watershed moment.” The ability to trade these derivatives, Fournier assures, “provides institutions with sophisticated tools for hedging and speculative strategies, which is key for sustaining Bitcoin’s upward trajectory.”
Along with potentially buoying the Bitcoin price, these options can help populate the crypto-sphere in a meaningful way, Fournier seems to suggest. “Liquidity is the lifeblood of any mature asset class, and these options are injecting exactly that into the market,” the BRN analyst explains.
Indeed, greater liquidity could conceivably help temper Bitcoin’s volatility. This, in turn, might contribute to an even more favorable market response to the options while also promoting Bitcoin’s broader adoption rate – ambitious hopes, perhaps, but well worth considering if Fournier’s bullish thesis holds weight.
Long-leaning or not, there’s clearly sustained interest in options on spot Bitcoin ETFs. While it’s too early for supporters to declare victory, the numbers indicate that the option buying phenomenon is more than just a flash in the pan.
Trading volumes in 2025 will help onlookers gauge the sustained interest in these options, but there’s a bigger-picture takeaway beyond the trades themselves. There will be detractors at every turn, no doubt, but it’s undeniable that the Bitcoin ETF options launch will have ripple effects touching innumerable traders across multiple asset classes.
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