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Cboe Global Markets, Inc., a prominent global exchange operator, has revealed plans to introduce cash-settled index options tied to spot Bitcoin ETFs on December 2. These options will trade on the Cboe Options Exchange and be regulated by the U.S. Securities and Exchange Commission (SEC).
Cboe Launches Bitcoin US ETF Index Options
The options will be based on the newly developed Cboe Bitcoin U.S. ETF Index (Ticker: CBTX). This index, created in collaboration between Cboe Labs and Cboe Global Indices, is described as the first U.S.-based spot Bitcoin ETF index.
Its design, which incorporates a modified market cap-weighting method, is intended to mirror the performance of spot BTC ETFs listed in the U.S.. Hence, it aims to provide a benchmark that closely reflects Bitcoin’s spot price. Moreover, traders will be able to use these index options to gain indirect exposure to BTC through spot Bitcoin ETFs.
“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 Rob Hocking, Cboe’s Global Head of Product Innovation. He emphasized the unique features, such as cash settlement and various contract sizes, that cater to both institutional and retail investors, according to a recent press release.
Risk Mitigating Strategy
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The cash-settled nature of these options means traders will not have to handle the physical delivery of Bitcoin ETFs upon contract expiration. The options will also follow a European-style exercise model, allowing exercise only at expiration. These features aim to simplify the trading process while mitigating associated risks.
Additionally, Cboe will introduce mini options on the same index under the ticker MBTX. These smaller contracts, with one-tenth the notional value of standard options, are designed for greater flexibility and appeal to traders managing smaller portfolios.
Both standard and mini options will also be available as cash-settled FLEX options, which enable customization of terms such as exercise price, style, and expiration. FLEX options provide the possibility for larger contract sizes, catering to diverse trading needs.
Cboe’s digital asset strategy includes Bitcoin and Ethereum margin futures, currently listed on Cboe Digital Exchange, with plans to migrate these to Cboe Futures Exchange by mid-2025, pending regulatory approval. The company’s BZX Equities Exchange has also gained prominence as a significant platform for trading spot Bitcoin and Ethereum ETFs in the U.S.
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