On November 19, 2024 the NASDAQ launched options trading on BlackRock’s iShares Bitcoin Trust (IBIT) ETF which saw an unprecedented $1.9 billion in notional exposure on the first day of trading. This type of volume on the first day of trading could be an indication of the massive volume that we may see in the coming weeks and months especially as there are increases in institutional investor inflows.
Binance CEO Richard Teng weighs in on what the launch means for crypto markets: “The launch of BTC ETF options is a natural progression in the evolution of crypto markets, aligning them with the sophisticated structures that characterize traditional finance. Just as derivatives markets have historically amplified engagement in equities and commodities, a robust crypto derivatives ecosystem could significantly scale institutional adoption. With regulators and clearinghouses aligning to support these innovations, the path forward looks promising for investors seeking diverse ways to engage with digital assets.”
The launch had record-breaking volume across 354,000 contracts, marking a massive shift in crypto and ETF markets. Out of the total 354,000 contracts, about 289,000 were call options, suggesting a bullish market sentiment across investors. As a response to the November 19th options launch Bitcoin saw a sharp price increase to all-time highs of $94,787, according to Binance.
Senior ETF Analyst for Bloomberg, Eric Balchunas explained in a post on X, “$1.9b is unheard of for Day One. For context, $BITO did $363m and that’s been around for four years. And also this is with 25,000 contract position limits. That said, $1.9b isn’t quite big dog level yet [though], eg $GLD did $5b today, but give it a few more days/weeks.”
The Road to Approval
The OCC issued a note saying, “On November 15, 2024, the CFTC Division of Clearing and Risk issued a staff advisory related to clearing of options on spot commodity exchange traded funds. Based on this advisory OCC is preparing for the clearance, settlement, and risk management of such options, which are subject to the new option listing process as outlined in the Options Listing Procedure Plan.”
In September of 2024 the SEC approved IBIT options trading after BlackRock withdrew its application a month before. The SEC then went on and changed Nasdaq rules to allow for listing of options on Grayscale Bitcoin Mini Trust (BTC), Grayscale Bitcoin Trust (GBTC) and Bitwise Bitcoin ETF (BITB).
Alison Hennessy, Nasdaq’s Head of ETP Listings, said on Monday, “Our intent at Nasdaq is to list and trade these options as early as tomorrow.” Hennessy continued, “Getting these options listed on IBIT into the market will be very exciting for investors.”
BRN analyst Valentin Fournier explains, “The SEC’s approval of options for Bitcoin ETFs could substantially impact Bitcoin’s price dynamics. First, it gives analysts more tools to assess institutional demand and overall market activity.”
Fournier continued, “Second, the broader range of investment strategies offered by ETF options makes Bitcoin ETFs more appealing. Finally, additional liquidity from options trading could help stabilize Bitcoin’s historically volatile price.”
