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The world’s largest options exchange, the CBOE, has sparked several reactions with its recent action. The exchange withdrew its previous application to refile a more detailed one for spot Bitcoin ETF options trading, reflecting some regulatory changes.
This move could bring the crypto space on the verge of witnessing approved spot Bitcoin ETF options trading.
Notably, Bitcoin ETF issuers, via their exchanges, initially filed for options trading seven months ago, seeking the Securities and Exchange Commission (SEC)’s approval. However, this application has met with challenges as the SEC deferred approval.
CBOE Resubmits An Updated Spot Bitcoin ETF Options Application
The CBOE’s recent refilling of its spot Bitcoin ETF options application has stirred discussions within the crypto space. In a tweetprominent Bloomberg ETF analyst James Seyffart said, “There’s some movement on Bitcoin ETF options.”
UPDATE: There’s definitely some movement on Bitcoin ETF options.
CBOE just withdrew their application for options on spot #Bitcoin ETFs. Which sounds like a bad thing at first… But at the same time they just re-filed a brand new and updated application https://t.co/L8qYTDXzPb pic.twitter.com/8BQG6JMROn
— James Seyffart (@JSeyff) August 8, 2024
According to the report, CBOE withdrew its first 15-page filing with the SEC and immediately replaced it with an updated 44-page application.
ETF analyst Seyffart described the new spot BTC ETF options trading application as having “a lot more meat” for investors to enjoy. The latest filing included more information, such as option position limits.
Also, the application addressed growing concerns and risks in the digital market space, such as market manipulation.
In his posts, Seyffart suggested that the SEC must have thrown feedback on the issuersprompting the refiling. Seyffart said, “To me, it means that the SEC likely gave some sort of feedback, which looks like it was related to position limits and market manipulation concerns.”
However, the analyst said whether the SEC prompted the latest CBOE refiling action is still uncertain. Also, the move could be another delay strategy to defer the regulator’s decline to April 2025.
Notably, CBOE, Nasdaqand NYSE American filed for a rule change to allow the listing and trading options for spot Bitcoin ETFs in January.
Increased Spot Bitcoin ETFs Adoption Spikes The Push The Funds’ Options
The increasing demand for spot Bitcoin ETFs in the traditional financial markets sparked the push for their options trading. As of August 8, the US spot Bitcoin ETFs have amassed a total net inflow of $17.43 billion.
Options are different from spot futures contracts in that they allow investors to either purchase or sell their contracts at a predetermined price by a set date.
Spot BTC ETF options could enable several investment strategies, including “covered call writing.” This strategy allows traders to sell or write a ‘call option,’ a contract that confers on another person the right to acquire the crypto contract at a particular price (the strike price).
Moreover, an investor can earn regular income by selling the call option from a ‘covered’ premium. This is because the investor owns the underlying asset through spot crypto ETF. These benefits make spot BTC options trading attractive to many investors.
During the initial filing in January, Catherine Clay, CBOE Global Market’s Head of Derivatives, discussed the potential benefits of ETF options in a CNBC interview.
Clay said, “We believe that the utility of the options, what they provide to the end investor in terms of downside hedging, risk-defined exposures into bitcoin, really would help the end investor and the ecosystem.”
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
