Options contracts on the spot Bitcoin exchange-traded fund (ETF) offered by the world’s largest asset manager BlackRock have started trading on the Nasdaq earlier today, November 19, and traders so far have been “basically betting” that the price of BTC “will double in the next month.”
In their first day of trading, options contracts on the iShares Bitcoin Trust (IBIT) saw “a few hundred million” contracts get traded, a significant trading volume on a product’s debut, according to senior Bloomberg ETF analyst Eric Balchunas.
On the microblogging platform X (formerly known as Twitter,) Balchunas detailed that the price action shows investors appear to be “very bullish,” with several call options contracts “basically betting [the] price of BTC will double in the next month.”
A few hundred million so far in options volume on $IBIT (a ton for Day One).. here’s a rank of the contracts by volume, it’s almost all calls. Seems very bullish, esp the Dec20th C100, which is basically betting price of btc will double in the next month. pic.twitter.com/R6HB7OMUla
— Eric Balchunas (@EricBalchunas) November 19, 2024
Options contracts give investors the right but not the obligation to buy or sell an underlying asset at a specific price, called the strike price, by a certain date, called the expiration date. They provide traders with the flexibility to deploy sophisticated strategies, including hedging positions or profit off of higher volatility.
Launching these options on a regulated instrument offering exposure to the spot price of Bitcoin is significant, as it allows institutions who may not want to directly hold long-only positions on the cryptocurrency to still gain exposure to its performance and volatility in a regulated environment, without using offshore exchanges.
Options trading on the iShares Bitcoin Trust is being launched at a time in which the fund has been seeing continuous growth, having recently surpassed $40 billion in assets under management after seeing a rise of $10 billion in just two weeks.
IBIT has been adding an ever-growing amount of Bitcoin to the fund partly over an ongoing Bitcoin price rally that has seen the price of the flagship cryptocurrency hit a new all-time high above the $93,000 mark.
BlackRock’s spot Bitcoin ETF, as the size of the fund grows, has to accumulate more Bitcoin to accommodate inflows, driving up demand for the cryptocurrency as it has to maintain its exposure and track the price of Bitcoin.
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