IBIT options trading volume surges to $446M in opening hours, $1.6B by mid-day

Choices buying and selling for BlackRock’s exchange-traded fund (ETF), iShares Bitcoin Belief ETF (IBIT), began on Nov. 19 at Nasdaq and has already moved over $446 million in its first buying and selling hours.

Bloomberg senior ETF analyst Eric Balchunas remarked that the quantity is “a ton” for a primary day, with practically 98% of buying and selling contracts being calls. He added:

“Appears very bullish, esp the Dec20th C100, which is principally betting worth of btc [Bitcoin] will double within the subsequent month.”

A “name” in an choice contract provides the appropriate to buy a safety at a predetermined worth, often called the strike worth, inside a particular interval, known as the expiration date. 

IBIT’s spot buying and selling quantity reached $1.6 billion as of press time, based mostly on Barchart data. 

Extra to come back

The addition of choices buying and selling to IBIT got here shortly following the Workplace of the Comptroller of the Foreign money’s (OCC) Nov. 18 memo that acknowledged it was “getting ready for the clearance, settlement, and threat administration.”

The approval provides the inexperienced mild for choices buying and selling for IBIT and different spot Bitcoin ETFs, as pointed out by Bloomberg ETF analyst James Seyffart, who expects extra itemizing of those merchandise this week.

Bitwise CEO Hunter Horsley expects choices buying and selling on the agency’s BITB to start out on Nov. 20.

‘Uncommon market dynamics’

Balchunas beforehand mentioned that choices itemizing for spot Bitcoin ETFs is a constructive growth, because it provides extra instruments for conventional traders and attracts extra liquidity from “huge fish.”

Nonetheless, Jeffrey Park, head of alpha methods at Bitwise, stated that Bitcoin nonetheless receives particular therapy for buying and selling. He identified that IBIT has solely 25,000 contracts as an authorized place restrict, representing solely 0.5% of the ETF’s shares.

An choice contract restrict limits the variety of contracts that may be held on the identical facet of the market. The restrict varies by ETF based mostly on the variety of excellent shares and buying and selling quantity.

In keeping with Park, IBIT ought to have certified for 400,000 choices contracts, which might have reached solely 7% of the excellent shares. He additionally compares IBIT’s restrict with CME Bitcoin futures contracts’ 2,000-contract restrict, equal to 175,000 contracts for IBIT.

Park added:

“Whereas I’m thrilled we’ve crossed the end line — particularly in 2024 — it’s exhausting to disregard the lingering particular therapy Bitcoin continues to obtain. I lengthy for the day when Bitcoin is now not marked with an asterisk.”

He defined that the 25,000-contract restrict would possibly create “uncommon market dynamics” and suggested retail merchants to discover arbitrage alternatives that would come up because of Bitcoin ETF choices.

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