Spot Bitcoin ETF Options: The Next Big Thing in Crypto Trading
The Wait is Over: Bitcoin ETF Options Are Coming
After months of anticipation, U.S. regulators are finally giving their attention to applications for options trading on spot Bitcoin (BTC) exchange-traded funds (ETFs). This long-overdue move signals a major step forward for both institutional investors and everyday traders. And here’s the real kicker—these options are expected to debut on U.S. exchanges this year. Better yet, Ethereum (ETH) ETF options won’t be far behind.
Now, if you’re wondering why this is such a game-changer, let’s break it down. Options offer traders the flexibility to buy or sell an asset at a predetermined price—either a “call” (to buy) or a “put” (to sell). They help hedge against market volatility and are a playground for speculators. With the success of spot Bitcoin ETFs earlier this year, the introduction of options trading is set to fuel even greater adoption, especially among larger players in the financial world.
Regulators Are Finally Getting on Board
Back in January, major U.S. exchanges like the New York Stock Exchange (NYSE) Arca, Cboe, and Nasdaq requested permission from the Securities and Exchange Commission (SEC) to introduce options on spot BTC ETFs. But instead of an enthusiastic green light, the SEC responded with… well, silence.
Options on crypto derivatives ETFs are already trading. Source: Bloomberg Intelligence
Concerns arose that options trading could attract the same speculative frenzy seen during the GameStop saga in 2021. In fact, industry watchdog Better Markets Inc. urged the SEC to tread carefully, fearing significant financial harm to retail investors. This led to multiple delays, as the SEC effectively hit the snooze button in March, April, and again in July.
But here’s the twist—progress is finally happening. On August 8, Cboe submitted an updated filing, packed with measures to address SEC concerns around market manipulation and trading limits. Bloomberg Intelligence analyst James Seyffart hinted at movement, suggesting that regulators have started engaging in the process. With the pressure of an election year mounting, it’s highly probable that approvals will come before November.
And it’s not just Bitcoin in the spotlight—Nasdaq recently filed for permission to introduce options on BlackRock’s iShares Ethereum Trust (ETHA), meaning Ethereum ETF options will soon follow.
A New Market Is About to Explode
For now, U.S. investors have been left with a less attractive alternative: trading options on Bitcoin futures ETFs, which track BTC’s price through derivative contracts rather than direct ownership. The downside? Futures-based ETFs often underperform spot markets due to the costs of rolling contracts forward. For example, ProShares’ Bitcoin Strategy ETF (BITO) underperformed spot Bitcoin by 2.6% from January to May.
Despite this, demand for Bitcoin ETF options is already sky-high. According to The Options Clearing Corporation, open interest in BTC futures ETF options surpassed $3.25 billion as of August 9. To put this in perspective, the total asset value of all BTC futures ETFs is just $4.3 billion.
Now, let’s apply this to spot Bitcoin ETFs. These funds boast a massive $58 billion in net asset value. If options trading follows similar trends, we could be looking at a new $45 billion market emerging practically overnight.
A Milestone for Crypto’s Mainstream Adoption
This isn’t just about big numbers. Options play a critical role in risk management and portfolio strategies for financial advisors and institutional investors. In fact, over 10% of financial advisors already use options in their portfolio strategies, highlighting the importance of risk hedging—especially in volatile markets like crypto.
Major players like Morgan Stanley have already authorized their 15,000 advisors to introduce spot BTC ETFs to clients. The addition of options will only make these funds more attractive, paving the way for greater institutional investment.
The Bottom Line
The approval of options trading for spot Bitcoin ETFs isn’t just a footnote in crypto history—it’s a pivotal moment that could drive unprecedented growth and legitimacy for digital assets. With regulators finally moving forward and institutional interest ramping up, this could be one of the biggest developments for crypto investment in years.
The wheels are in motion, and if you listen closely, you can almost hear Wall Street stepping in.
Alex O’Donnell is a senior writer for Cointelegraph. He previously founded DeFi developer Umami Labs and spent seven years at Reuters covering M&A and IPOs. He is currently the crypto growth lead at startup accelerator Expert Dojo.
This article is for informational purposes only and should not be considered legal or investment advice. The opinions expressed are solely those of the author and do not necessarily reflect Cointelegraph’s views.
