Options trading for IBIT, the iShares Bitcoin Trust ETF, kicked off on November 19 at Nasdaq and quickly gained momentum. The trading volume surged to $446 million in the opening hours, with a significant portion of the contracts being ‘call’ orders to buy BTC. This surge in trading activity is seen as very bullish by analysts, especially considering that nearly 98% of the contracts were calls.
Eric Balchunas, a senior analyst at Bloomberg, described the volume as “a ton” for the first day of trading. He highlighted the Dec20th C100 call option, which suggests that investors are betting on the price of Bitcoin doubling in the next month. A call option gives the holder the right to purchase a security at a predetermined price within a specific period, which in this case is the expiration date.
As of the latest data from Barchart, IBIT’s spot trading volume has reached $1.6 billion, indicating strong interest in the ETF. The addition of options trading to IBIT followed the Office of the Comptroller of the Currency’s memo on preparing for clearance, settlement, and risk management. This approval has paved the way for options trading on IBIT and other spot Bitcoin ETFs, with more listings expected in the coming week.
While the introduction of options trading for spot Bitcoin ETFs is seen as a positive development by many, there are concerns about the special treatment Bitcoin receives in the market. Jeffrey Park, head of alpha strategies at Bitwise, pointed out that IBIT has a limit of only 25,000 contracts, representing a small fraction of the ETF’s shares. This limit could lead to unusual market dynamics and create arbitrage opportunities for retail traders.
Despite the limitations, the enthusiasm for options trading on Bitcoin ETFs remains high. Bitwise CEO Hunter Horsley is set to launch options trading on the firm’s BITB on November 20, further expanding the options available to investors. The growing interest in options trading reflects the increasing maturity and acceptance of Bitcoin and other cryptocurrencies in the traditional financial markets.