The Bitcoin index options that have been proposed here would create an efficient means for institutional investors and traders to hedge their Bitcoin risks.
Nasdaq filed an application with the US Securities and Exchange Commission (SEC) to launch and trade options on a new Bitcoin index, the exchange operator announced on Tuesday.
The SEC has yet to approve options for any of the spot Bitcoin exchange-traded funds (ETFs) that have launched this year, including Nasdaq’s application for options on BlackRock’s iShares Bitcoin Trust ETF, which has an NAV of $21.3 billion.
Matt Hougan Pushes for Bitcoin Options to Enhance Market Efficiency
The Bitcoin index options proposed would allow institutional investors and traders to hedge their bitcoin exposure more efficiently. These index options, which are exchange-listed derivatives, would allow investors to either protect or amplify their exposure to bitcoin, the largest cryptocurrency by market capitalization.
Speaking on the availability of options, Bitwise’s chief investment officer Matt Hougan said that options are needed to bring the crypto market to the next level of standardization and efficiency.
Options are a security that gives the purchaser the right, but not the obligation, to buy or sell an asset at a specified price on a specific date. Some are used by traders to increase their buying power, while others are used by institutional investors to hedge the risk in their operations.
The proposed Nasdaq Bitcoin Index Options will be based on the CME CF Bitcoin Real-Time Index, which was created by CF Benchmarks to measure the value of bitcoin futures and options at the CME Group Exchange.
While traders await the SEC’s decision on options, they have turned to other products, such as the recently launched leveraged ETFs linked to bitcoin and options on these products. Applications for spot bitcoin ETF options were filed earlier this year in anticipation of the SEC approving the ETFs, but these applications have been recently amended following feedback from the SEC in recent weeks.
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