BlackRock had requested approval for options on Nasdaq since March of this year, following the approval of spot ETFs in January.
On September 20th, the Securities and Exchange Commission of the United States approved the listing of options on BlackRock’s spot Bitcoin ETF, the iShares Bitcoin Trust (IBIT). However, it will also be necessary to obtain approval from the CFTC, the US agency responsible for derivative contracts and commodities, as well as from the OCC, which manages the settlement of such contracts.
Implications for institutional investors
Options are derivative financial instruments that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a certain expiration date. There are two main types of options:
- Call options: offer the right to buy the underlying asset.
- Put options: offer the right to sell the underlying asset.
Options are used for various purposes, including speculation on price movements, hedging against risks, and generating income through trading strategies.
The listing of options on IBIT will offer investors risk management tools, hedging strategies and exposure to the price of Bitcoin.
In particular, options on the IBIT ETF will provide for the “physical” delivery of bitcoins when exercised. This means that if an investor decides to use the option, they will actually receive bitcoin. Furthermore, being American-style options, they can be exercised at any time before expiration, which will give traders more freedom of choice.
