Cboe will first launch cash-backed Bitcoin index options

Cboe will launch cash-backed Bitcoin index options on December 2 based on the CBTX index. The options offer direct exposure to Bitcoin through US spot Bitcoin ETFs. Minimal options and customizable FLEX options are also available at launch.

Cboe Global Markets, a leader in the derivatives and securities exchange network, has announced plans to launch the first cash-settled index options linked to the price of Bitcoin.

The new offering, which will go live on December 2, 2024, is based on the Cboe Bitcoin US ETF Index (CBTX), which represents significant growth in the world of cryptocurrency derivatives.

The CBTX Index, a modified market cap weighted measure developed by Cboe Labs and Cboe Global Indices, is designed to track the performance of a basket of Bitcoin Exchange Traded Funds (ETFs) listed on US exchanges. The index aims to provide direct exposure to Bitcoin by reflecting the performance of these ETFs, providing a way for investors to gain exposure to Bitcoin price movements without directly holding the asset.

Futures options are listed exclusively on the Cboe Options Exchange, regulated by the US Securities and Exchange Commission (SEC), and are cash-settled at expiration. This means that positions are closed in cash instead of requiring physical delivery of Bitcoin ETFs, making the process easier for traders.

Additionally, these options exercise the European style, which means they only expire on the expiry date, eliminating the risk of early allocation.

In order to further expand market reach, Cboe will offer minimum options (MBTX) at launch. These options are typically one-tenth the notional value of standard options, providing greater flexibility for smaller portfolios and greater risk management.

In addition, Cboe plans to introduce cash-settled FLEX options for both CBTX and MBTX, allowing traders to customize key contract terms such as exercise price, style and expiration date.

Rob Hocking, global head of product innovation at Cboe, highlighted that the new options products are designed to meet the growing demand for efficient exposure to Bitcoin.

The launch is aligned with Cboe's broader digital assets strategy, which includes Bitcoin and Ether futures, and aims to provide both institutional and retail investors with new tools to capitalize on or hedge against Bitcoin's price movements.

This move underscores Cboe's commitment to expanding its crypto derivatives offerings and strengthening its position as a leading provider of crypto-related trading products.