Options Tied to BlackRock’s Bitcoin ETF Surge to Almost 50% of Deribit’s BTC Open Interest in Two Months
The state’s need for regulated crypto products is real.
US SEC-approved options tied to BlackRock’s spot bitcoin (BTC) exchange-traded fund (IBIT), which debuted on Nov. 19, is about half the size of Deribit’s. eight years old bitcoin options market.
As of Monday, there were 2.16 million open or active IBIT options contracts, representing a notional value of $11 billion, according to data source optioncharts.io. This notional value is obtained by multiplying the open interest by the price of the ETF and the lot size of 100.
The tally equals 50% of $23 billion locked with open BTC options on Deribit at press time. An option contract on Deribit represents one BTC.
Options are derivative contracts that give the buyer the right to buy or sell the underlying asset at a preset price at a later date. A call gives the right to buy, and a put offer gives the right to sell.
Similar to traditional markets, traders use crypto options to speculate or hedge against price movements, volatility, and timing effects (referred to as theta).
Deribit has held a leading position for years, with traders and investors using its bitcoin and ether options to set up complex directional and non-directional strategies. However, the exchange’s offshore status has kept US-based investors seeking regulated avenues at bay. IBIT options step in to fill that gap.
“With BlackRock’s Bitcoin ETF in place as its underlying asset, IBIT options appeal not only to institutional investors but also to US retail traders who favor regulated markets. The rapidly expanding segment that this is reflected in the increase in demand for IBIT options,” Volmex Finance, a crypto derivatives. protocol, told CoinDesk in an email.
Volmex added that the growing popularity of IBIT options is challenging Deribit’s dominance in the crypto options market. However, Deribit’s Chief Executive Officer Luuk Strijers said that IBIT’s options have created positive ripple effects for the industry.
“IBIT options are mostly traded by US retail investors, a segment that has historically not had access to Deribit. As such, their activation does not negatively impact our market activity. If anything, create This will have positive effects by introducing new arbitrage opportunities and facilitating improved risk mitigation strategies for institutional participants as Deribit continues to act as the global repository for risk and volatility,” Strijers said. on CoinDesk.
Strijers explained that activity in IBIT options is concentrated in short-dated options, indicating a need for lower premium (price) options.
