Nasdaq’s Bitcoin Index Options Proposal

On Tuesday, Nasdaq announced its plans to seek approval for trading options based on a bitcoin index.

SEC’s Response

According to a report from Reuters, the U.S. Securities and Exchange Commission (SEC) has not yet approved options linked to individual exchange-traded funds (ETFs) associated with spot bitcoin prices. This includes Nasdaq’s own application for options on BlackRock’s $21.3 billion iShares Bitcoin Trust ETF.

Benefits of Proposed Index Options

These index options aim to provide institutional investors and traders with a cost-effective way to gain or hedge bitcoin exposure, facilitating easier access to the leading cryptocurrency by market value.

Understanding Options

Options are financial instruments that give holders the right to buy or sell an asset, like a stock or ETF, at a predetermined price before a specified deadline. This allows traders to leverage their positions affordably, while institutional investors commonly use them for risk reduction.

The Bitcoin Index

As per the proposal, Nasdaq’s Bitcoin Index Options would be based on the CME CF Bitcoin Real-Time Index, which tracks bitcoin futures and options on the CME Group’s exchange.

Market Alternatives

While the SEC continues to evaluate new spot bitcoin ETF options, traders are turning to alternative products, such as newly launched leveraged ETFs and their associated options.

Application Updates

Spot bitcoin ETF options applications were submitted after the SEC signaled potential approval for the respective ETFs in January. However, exchanges have withdrawn and then resubmitted these applications following SEC feedback.