Cboe to launch first cash-settled options for spot Bitcoin

Cboe Global Markets plans to launch the first cash-settled index options that will reflect the spot Bitcoin price.

The Cboe Bitcoin US ETF Index, codenamed CBTX, will track the performance of spot Bitcoin (BTC) exchange-traded funds listed in the US. The product will be regulated by the U.S. Securities and Exchange Commission and will be available on the Cboe Options Exchange on December 2.

CBTX is a modified market cap-weighted spot BTC ETF jointly offered by Cboe Labs and Cboe Global Indices, the derivatives exchange said in a press release on Nov. 22.

The index will correlate the price of Bitcoin and provide investors with indirect exposure to the flagship cryptocurrency through a range of ETFs. In the trading market, an options index offers participants exposure to a specific index rather than individual assets.

The upcoming launch of the options index follows the launch of spot Bitcoin ETF options in the US, with massive demand contributing to the overall bullish outlook for the underlying asset. With CBTX, market participants will be able to benefit from BTC’s price movements. However, instead of physical delivery of ETFs, index options will be settled at maturity and settled in cash.

Apart from CBTX, Cboe also plans to launch mini options that will offer 1/10 of the notional value of standard options. This will be possible through Cboe Mini Bitcoin US ETF Index options, which will trade under the ticker MBTX.

Cash-settled FLEX options will also be available for both CBTX and MBTX and are designed to allow investors to customize the features of the contracts, including strike price, style and expiration date.

“Our new suite of options on the Cboe Bitcoin US ETF Index provides a timely and compelling solution for investors to effectively access spot Bitcoin,” said Rob Hocking, Cboe’s head of global product innovation.

Hocking added that the offerings will appeal to retail and institutional participants who want indirect exposure to Bitcoin’s price movements.

Bitcoin is planning to rise above $100,000 after passing $99,000 earlier in the day. Meanwhile, spot ETF options are expected to attract more investors once they hit the market with impressive volumes.