Cboe to launch first cash-settled Bitcoin index options

• Cboe to launch cash-settled Bitcoin index options based on the CBTX index on Dec 2.
• The options will offer indirect exposure to Bitcoin via US spot Bitcoin ETFs.
• Mini options and customizable FLEX options will also be 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 tied to the price of spot Bitcoin.

The new offering, set to go live on December 2, 2024, will be based on the Cboe Bitcoin US ETF Index (CBTX), marking a significant development in the world of cryptocurrency derivatives.

The CBTX index, a modified market cap-weighted benchmark 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 offer indirect exposure to spot Bitcoin by reflecting the performance of these ETFs, providing investors with a way to gain exposure to Bitcoin’s price movements without directly holding the asset.

The upcoming options will be listed exclusively on the Cboe Options Exchange, regulated by the US Securities and Exchange Commission (SEC), and will be cash-settled at expiration. This means that positions will be closed in cash rather than requiring physical delivery of Bitcoin ETFs, simplifying the process for traders.

In addition, these options will feature European-style exercise, meaning they can only be exercised on the expiration date, eliminating the risk of early assignment.

To further broaden market access, Cboe will also offer mini options (MBTX) at launch. These options will be one-tenth the notional value of the standard options, offering greater flexibility for smaller portfolios and more granular risk management.

Additionally, 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 aligns with Cboe’s broader digital assets strategy, which includes Bitcoin and Ether futures, and aims to provide both institutional and retail investors with innovative tools to capitalize on or hedge against Bitcoin price movements.

This move underscores Cboe’s commitment to expanding its crypto derivatives offerings and strengthening its position as a leading venue for crypto-related trading products.