Cboe Set to Launch Pioneering Cash-Settled Bitcoin ETF Options, Expanding Crypto Derivatives Landscape
Cboe Global Markets announced plans to introduce the first-ever cash-settled index options tied to spot Bitcoin ETFs, scheduled to launch on December 2, 2024. The new product will track the Cboe Bitcoin U.S. ETF Index (CBTX), a modified market cap-weighted index designed to reflect the performance of U.S.-listed spot Bitcoin ETFs.
The innovative offering includes both standard and mini options contracts, with the latter featuring one-tenth the notional value of standard options, making it more accessible to a broader range of investors. The options will employ European-style exercise, meaning they can only be exercised on their expiration date, thereby eliminating early assignment risks.
Rob Hocking, Global Head of Product Innovation at Cboe, emphasized the strategic importance of the launch: “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.” He noted that the cash-settlement feature, combined with various index sizes and FLEX options, would provide customers with enhanced flexibility in their trading strategies.
The exchange will also offer cash-settled FLEX options for both CBTX and its mini counterpart (MBTX), allowing traders to customize key contract terms such as exercise price, style, and expiration date. This flexibility is particularly valuable for institutional investors who may require specific terms to match their investment strategies or risk management needs.
This launch represents a significant expansion of Cboe’s digital assets derivatives portfolio, which already includes cash-settled Bitcoin and Ether margin futures traded on the Cboe Digital Exchange. These futures contracts are expected to transition to the Cboe Futures Exchange in the first half of 2025, pending regulatory review.
Adam Inzirillo, Global Head of Data and Access Solutions at Cboe, highlighted the exchange’s comprehensive approach: “This latest initiative showcases the strength of Cboe’s exchange ecosystem – from listing and trading spot Bitcoin ETFs on our U.S. equities exchange, to generating data that drives index creation, and now launching innovative tradable products.”
The new options product arrives at a time of growing institutional interest in cryptocurrency derivatives, offering market participants a regulated way to gain exposure to Bitcoin price movements without directly holding the asset. The cash-settlement feature simplifies the trading process by eliminating the need to handle physical delivery of Bitcoin ETFs at expiration.
