The US Securities and Exchange Commission (SEC) has approved landmark applications to list and trade options on various Bitcoin ETFs on two major exchanges. This decision significantly expands the range of crypto-related investment products for US investors. According to SEC filings, Cboe Exchange received permission to offer options on the Fidelity Wise Origin Bitcoin Fund (FBTC) and the ARK 21Shares Bitcoin ETF (ARKB). NYSE American is now allowed to list options on the Grayscale Bitcoin Trust ETF (GBTC), the Grayscale Bitcoin Mini Trust (BTC) and the Bitwise Bitcoin ETF (BITB). Since the beginning of the year, spot Bitcoin ETFs have also been able to be traded thanks to the SEC. The regulator’s latest decision builds on an earlier move allowing options trading on BlackRock’s iShares Bitcoin Trust (IBIT), the largest spot Bitcoin ETF. Cboe and NYSE American plan to implement conservative position limits of 25,000 contracts each on the same side of the market for each Bitcoin ETF option. These limits are lower than many other ETF options and reflect a cautious approach to the new products. The introduction of options on Bitcoin ETFs offers investors new tools to manage risk and potentially increase returns in the crypto space. Options allow traders to speculate on future price movements or hedge existing positions without having to directly own the underlying assets. Both exchanges, Cboe and NYSE American, emphasize that existing monitoring procedures also apply to the new Bitcoin ETF options. As members of the Intermarket Surveillance Group, they promote the exchange of information to detect possible market manipulation. In addition, the exchanges provide data on the liquidity and trading volume of the underlying Bitcoin ETFs. As of August 30, NYSE American’s GBTC had over 284 million shares outstanding and a market cap of over $13.4 billion. BTC had nearly 367 million shares outstanding, while BITB had around 68.7 million shares outstanding. Cboe reported that as of August 7, FBTC had more than 201 million shares outstanding, with a six-month trading volume of over 1.1 billion shares. ARKB had approximately 45.5 million shares outstanding and a six-month trading volume of over 297 million shares. Both exchanges underline that existing customer due diligence rules and suitability standards will also apply to these new options products in order to protect retail investors who may be less familiar with the complex aspects of options trading.
