Global derivatives and securities exchange network Cboe Global Markets, is to launch the first cash-settled index options related to the price of spot bitcoin, beginning Monday, 2 December.
Exclusively listed and traded on Cboe Options Exchange, these options will be SEC-regulated and based on the new Cboe Bitcoin US ETF Index.
The index, jointly developed by Cboe Labs and Cboe Global Indices, is the market’s first US spot Bitcoin ETF index, and is a modified market cap-weighted index designed to track the performance of a basket of spot bitcoin ETFs listed in the US. It is also designed to correlate to the price of spot bitcoin, making it a representative measure of the cryptocurrency.
According to a press statement, options on the Cboe Bitcoin US ETF Index will allow market participants to gain exposure to spot bitcoin ETFs – and indirectly to bitcoin itself – enabling them to capitalise on price movements, manage risk, and express their market views. These index options will be cash-settled, meaning positions are closed in cash at expiration, removing the complexities of physically delivering bitcoin ETFs. In addition to cash settlement, these index options will offer European-style exercise, meaning they are exercisable only on the expiration date, eliminating the risks of early assignment.
Alongside options on the standard-sized index, Cboe plans to offer Cboe Mini Bitcoin US ETF Index options at launch, with a 1/10th notional value of the standard options, offering greater granularity and flexibility in managing basis risk. Cboe also plans to offer cash-settled FLEX options on both the Cboe Bitcoin US ETF Index and the Cboe Mini Bitcoin US ETF Index, allowing traders to customise key contract terms such as exercise price, exercise style, and expiration date – potentially enabling traders to hold larger positions than typically allowed for using standard options contracts.
Cboe’s existing digital assets derivatives offerings already include cash-settled bitcoin and ether margin futures listed and traded on Cboe Digital Exchange that are expected to transition to Cboe Futures Exchange in the first half of 2025, pending regulatory review.
