On October 18, the United States Securities and Exchange Commission (SEC) approved applications from the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE) to list options for spot Bitcoin exchange-traded funds (ETFs).
This approval allows options trading for 11 ETF providers on the NYSE, including Fidelity Wise Origin Bitcoin Fund, ARK21Shares Bitcoin ETF, Invesco Galaxy Bitcoin ETF, Franklin Bitcoin ETF, VanEck Bitcoin Trust, WisdomTree’s Bitcoin Fund, Grayscale’s Bitcoin Trust, Grayscale Bitcoin Mini Trust, Bitwise Bitcoin ETF, BlackRock’s iShares Bitcoin Trust ETF, and the Valkyrie Bitcoin Fund.
The CBOE had filed an application in August 2024 to list options for the spot Bitcoin ETF providers through a proposed rule change. The SEC’s decision places Bitcoin ETF options in the same category as other commodity-based ETFs listed on the CBOE, except for Grayscale’s Bitcoin Mini Trust.
The approval is expected to bring significant changes to the Bitcoin market by increasing liquidity and potentially impacting price movements.
Jeff Park, an executive at Bitwise, described the approval as a major upgrade over existing platforms like LedgerX and Deribit, which do not have central guarantors. Park also suggested that the introduction of options could lead to short squeezes, where overleveraged short traders are forced to buy Bitcoin to cover their positions. He remarked, “Saying you can’t short squeeze a trillion-dollar asset is like saying you can’t make an elephant dance. Sure, it’s huge, but if you tie enough ropes to its legs and pull hard enough, even the biggest creature can be moved in ways it doesn’t want.”
Tom Dunleavy, managing partner at investment firm MV Global, noted that the introduction of options could also help reduce Bitcoin’s high volatility and lead to more stable market conditions over time.
