Cboe to Launch First Cash-Settled Options on Spot Bitcoin ETFs

Bitcoin Bitcoin ETF

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Hongji Feng

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Hongji Feng

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Hongji is a crypto and tech reporter. He graduated from Northwestern University's Medill School of Journalism with a Bachelor's and a Master's. He has previously interned at HTX (Huobi Global),...

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November 21, 2024

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The Chicago Board Options Exchange (Cboe) will launch cash-settled index options based on its Bitcoin U.S. ETF Index starting Dec. 2.

According to a recent announcement by Cboe, the options will be listed on its Options Exchange, allowing traders to gain exposure to Bitcoin price fluctuations without holding the underlying asset.

Cboe to Introduce Bitcoin US ETF Index Options

Cboe’s new Bitcoin U.S. ETF Index options will be available in multiple formats, including standard-sized, mini, and FLEX contracts. The mini options, at 1/10th the size of the standard options, are designed to cater to a broader range of portfolio sizes and trading strategies.

The index tracks the performance of a basket of U.S.-listed spot Bitcoin exchange-traded funds (ETFs). Cboe emphasized that the index is structured to reflect the price movements of spot Bitcoin, providing a benchmark for these new derivatives.

The cash-settled options, exercisable only on their expiration date, are intended to simplify trading by removing the complexities associated with holding or delivering Bitcoin ETFs. Settlement is completed in cash based on the index value at expiration.

Cboe also announced that the FLEX options will allow traders to customize contract terms such as expiration dates, strike prices, and exercise styles.

“Our new suite of options on the Cboe Bitcoin U.S. ETF Index offers a timely and compelling solution for traders to efficiently gain exposure to spot Bitcoin,” said Cboe Global Head of Product Innovation Rob Hocking.

Expanding Existing Crypto ETF Offerings

The launch expands Cboe’s digital asset offerings, including cash-settled Bitcoin and Ethereum futures. These products are part of a broader effort to meet the growing demand for regulated crypto derivatives in the U.S. market.

“We expect the unique benefits of cash-settlement, combined with the availability of various index sizes and FLEX options, will give customers more flexibility in their trading strategies,” said Hocking.

“Our index options offer a unique value proposition that we believe will appeal to both institutional participants and retail traders alike, who are looking to capitalize on or hedge against Bitcoin’s price movements without directly holding the asset,” added Hocking.