Options trading for BlackRock’s iShares Bitcoin Trust ETF (IBIT) kicked off on Nov. 19 at Nasdaq and made a significant splash, moving over $446 million within its first few hours of trading. Bloomberg senior ETF analyst Eric Balchunas noted that the trading volume on the first day was impressive, with nearly 98% of trading contracts being calls. He highlighted the bullish sentiment in the market, especially for the Dec. 20th C100 call option, which essentially bets on Bitcoin’s price doubling in the next month.
In options trading, a “call” gives the holder the right to buy a security at a predetermined price (strike price) within a specific timeframe (expiration date). IBIT’s spot trading volume had reached $1.6 billion at the time of reporting, according to Barchart data.
The approval for options trading on IBIT came swiftly after the Office of the Comptroller of the Currency (OCC) issued a memo on Nov. 18, signaling readiness for clearance, settlement, and risk management. This green light not only applies to IBIT but also paves the way for options trading on other spot Bitcoin ETFs, as highlighted by Bloomberg ETF analyst James Seyffart. More listings of similar products are expected in the coming days.
Bitwise CEO Hunter Horsley anticipates options trading for the firm’s BITB to commence on Nov. 20. Balchunas has expressed optimism about the introduction of options trading for spot Bitcoin ETFs, as it offers more tools for traditional investors and attracts greater liquidity from institutional players.
However, Jeffrey Park, head of alpha strategies at Bitwise, raised concerns about the special treatment Bitcoin receives in trading. He pointed out that IBIT has a limit of 25,000 contracts, representing only 0.5% of the ETF’s shares. This restriction on option contracts could lead to unique market dynamics, prompting retail traders to explore arbitrage opportunities arising from Bitcoin ETF options.
Park emphasized the need for a level playing field for Bitcoin in the market, suggesting that the current limitations could create distortions. Despite the progress made in options trading for Bitcoin ETFs, there is still work to be done to ensure fair and equitable trading conditions for all assets.