This article is also available in Spanish.
BlackRock, the world's largest asset manager, has officially launched options trading for its bitcoin ETF, the iShares bitcoin Trust (IBIT). This debut comes after the ETF received regulatory approval in January and has since attracted significant tickets.
Greater liquidity and lower volatility on the horizon
According to Bloomberg, the introduction of options trading on the $43 billion iShares bitcoin Trust is expected to reduce volatility while expanding bitcoin's investor base.
Related reading
Alex Thorn, head of enterprise-wide research at Galaxy Digital, said during a Bloomberg Telev interview.ision <a target="_blank" href="https://www.bloomberg.com/news/articles/2024-11-19/bitcoin-etf-options-will-lower-volatility-galaxy-s-thorn-says?utm_source=twitter&utm_campaign=socialflow-organic&utm_medium=social&utm_content=crypto” target=”_blank” rel=”nofollow”>interview that as bitcoin becomes mainstream, its volatility is likely to decrease. “Options will help dampen volatility and as volatility decreases, people will be able to take larger positions,” he explained.
Thorn noted that a decrease in volatility could change investor sentiment, encouraging them to view bitcoin as a viable asset for fundamental use cases rather than a mere speculative bet.
The availability of options will also allow institutions to hedge their positions more effectively, increasing liquidity and potentially impacting retail trading during bull market conditions.
Call Options Dominate BlackRock bitcoin ETF on Day 1
Bloomberg ETF analysts Eric Balchunas and James Seyffart reported that on the first day of options trading, total notional exposure for IBIT reached nearly $1.9 billion, spread across 354,000 contracts.
Of these contracts, 289,000 were calls, while 65,000 were puts, resulting in a bullish call to put ratio of 4.4:1. Seyffart <a target="_blank" href="https://x.com/JSeyff/status/1858991206476509659″ target=”_blank” rel=”nofollow”>reclaimed That this overwhelming interest in call options contributed to bitcoin reaching new all-time highs of $94,000 during Tuesday's trading session for the market-leading cryptocurrency.
Balchunas, for his part, <a target="_blank" href="https://x.com/EricBalchunas/status/1858916477384225005″ target=”_blank” rel=”nofollow”>pointed out that most options contracts are bullish, especially the December 20 call option, which essentially bets that the price of bitcoin will double within a month. This means that based on current prices, investors expect btc to hit a new record high of just over $180,000 by then.
The put/buy volume ratio for the BlackRock bitcoin ETF was “impressive,” according to Balchunas, who noted that the 0.17 ratio indicates strong bullish sentiment compared to other ETFs, such as the SPDR S&P 500 ETF (SPY) with a ratio of 1.1.
Related reading
Market expert Marty Party highlighted in a <a target="_blank" href="https://x.com/martypartymusic/status/1858677617114669233″ target=”_blank” rel=”nofollow”>social media post that options on the iShares bitcoin Trust will be settled in real bitcoin. This means that when an option contract is exercised, settlement will involve the delivery of bitcoin, giving investors direct exposure to btc price movements without the need to interact with crypto exchanges.
At the time of writing, the market's top digital asset is trading at $91,580, up 4% on the weekly period following today's bullish move to its new high.
Featured image of DALL-E, chart from TradingView.com
