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Cboe, the derivatives exchange for trading digital assets and securities, is set to make a significant addition to the crypto landscape by launching the first cash-settled index options linked to Bitcoin spot price movements (BTC). Program These options, which will debut on December 2, will be based on the Cboe Bitcoin ETF Index, which tracks a selection of U.S.-listed Bitcoin spot exchange-traded funds.
What this means for traders
The introduction of these options closely follows Nasdaq’s recent listing of Bitcoin ETF spot options. The move allows US investors to use derivatives to speculate or hedge against BTC price movements.
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Alex Thorn, head of enterprise-wide research at Galaxy Digital, underlines that the reduction in Bitcoin volatility could significantly change investor perceptions. The availability of cash-settled options will provide institutions with effective tools to hedge their positions, potentially increasing overall market liquidity.
This influx of options trading could also influence the behavior of retail traders, particularly during bullish market conditions. Notably, the current surge in Bitcoin price, which has reached an all-time high of $99,300, has been partly attributed to increased trading activity and market optimism.
Therefore, the introduction of cash-settled options could further push Bitcoin above the $100,000 markespecially given the increased buying pressure seen in recent days.
Cboe’s options on the Bitcoin ETF Index will also allow market participants to gain exposure to spot Bitcoin ETFs and, by extension, Bitcoin itself. The cash-settled nature of these options would simplify the process, as the positions will be resolved in cash upon expiration.
Additionally, the options will feature a “European-style exercise,” meaning they can only be exercised on the expiration date, thereby minimizing the risks associated with early assignment.
Cboe Mini Bitcoin ETF Options
Along with standard-sized index options, Cboe plans to launch Cboe Mini Bitcoin ETF index options (ticker: MBTX), valued at one-tenth of the notional value of standard options.
Additionally, Cboe will also offer cash-settled FLEX options on standard and mini index options. FLEXIBLE options allow traders to customize key contract terms such as strike price, strike style and expiration date, thereby providing greater flexibility in trading strategies and allowing larger positions than typically permitted with standard options contracts.
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Rob Hocking, global head of product innovation at Cboe, highlighted the benefits of cash settlement and the variety of index sizes available, which should attract institutional and retail players looking to hedge or capitalize on Bitcoin. price movements without directly holding the asset.
The exchange already lists cash-settled Bitcoin and Ether margined futures on the Cboe Digital Exchange, and plans to move these products to the Cboe Futures Exchange in the first half of 2025, pending regulatory approval.
Cboe’s BZX Equities Exchange also holds a leading position in the US cash equity market. Crypto ETFsafter capturing a majority market share of available Bitcoin and Ethereum ETFs.
At the time of writing, the market’s leading cryptocurrency is trading at $99,240.
Featured image of DALL-E, chart by TradingView.com
