The crypto industry may be closer to seeing approved options trading on spot Bitcoin ETFs, seven months after issuers and their exchanges first applied for their approval with the Securities and Exchange Commission.
In a post on X on Aug. 8, Bloomberg ETF analyst James Seyffart observed that “there’s definitely some movement on Bitcoin ETF options.”
The comment came as the CBOE withdrew its application for options on spot Bitcoin (BTC) ETFs but immediately replaced it with a more detailed filing.
“Which sounds like a bad thing at first... But at the same time, they just re-filed a brand new and updated application,”
Seyffart noted the original 15-page filing was replaced with a new 44-page one with “a lot more meat,” such as position limits and market manipulation concerns, suggesting that the issuers may have received feedback from the SEC.
“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.”
Seyffart, however, said that there was no way to know for certain if the SEC was engaging with the CBOE on this, and it could be another delaying tactic to “restart the clock,” pushing the decision deadline back to late April 2025.
He added that Bloomberg analysts think Bitcoin ETF options will happen in the fourth quarter of this year. The final deadline for the SEC decision is around Sept. 21, “but there's more steps needed after that from the OCC [Office of the Comptroller of the Currency] and CFTC [Commodity Futures Trading Commission],” he said.
In January, NYSE American, CBOE, and Nasdaq filed applications for a proposed rule change to list and trade options for spot Bitcoin ETFs.
However, the SEC pushed back its decision for the CBOE in March and aldeferred its decision on whether to allow the NYSE American to offer options trading on spot ETFs in April.
On Aug. 9, ETF Store president Nate Geraci pointed out that options were already available on some crypto derivatives ETPs, so it made sense to offer them on spot ETFs.
Related: Grayscale, Bitwise, NYSE American apply to list options on 3 Ether ETFs
Options differ slightly from spot and futures contracts in that they provide the trader the option to buy or sell the contract at a predetermined price by a set date.
Options based on spot Bitcoin ETFs could also provide different investment strategies, such as “covered call writing.” This strategy involves selling or writing a “call option,” which is a contract that gives someone else the right to buy the crypto contract at a specific price called the strike price.
Selling the call option can generate a regular income from the premium which is “covered” because the investor owns the underlying asset via the spot crypto ETF, thus limiting the risks.
The premium is received upfront when selling the option but this strategy can limit potential gains if the asset price rises significantly above the strike price.
CBOE Global Markets’ head of derivatives, Catherine Clay, told CNBC in at the time of the initial filing in January:
“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,”
“You’re going to start seeing all sorts of hedge fund players in the space,” said Dave Nadig, financial futurist at VettaFi, before adding, “Folks who might not have been traditionally speculating on crypto directly in the crypto ecosystem are now going to have something to play with.”
Learn: Covered call options strategy, explained
