Bitcoin ETF options will launch after SEC approval of BlackRock’s application

• BlackRock has received the green light from the SEC to list Bitcoin options ETFs on the spot
• Bitcoin options trading on IBIT will follow BlackRock standards.
• The OCC and CFTC must give their approval before the options can take effect.

According to a filing on Friday, the US Securities and Exchange Commission (SEC) approved BlackRock’s 19-b4 application to list and trade options on the iShares Bitcoin Trust (IBIT).

BlackRock gets approval to trade options on spot Bitcoin ETFs

The SEC has approved BlackRock’s application to list and trade options contracts on the iShares Bitcoin Trust (IBIT). The approval was revealed in a filing released Friday, allowing physically set options. This means that when a contract is exercised, it will result in the delivery of Bitcoin.

Options trading is a form of derivatives trading that gives investors the right, but not the obligation, to buy or sell an asset at a predetermined price and within a specific time frame.

BlackRock will treat IBIT options as American-style options, allowing investors to exercise the contract at any time before or on the expiration date. This style allows investors to easily react to market changes to maximize profits and avoid losses.

The SEC said options on IBIT will provide investors with precise risk management and “hedging” to gain exposure to the price of Bitcoin and Bitcoin-related products.

Options for IBIT will comply with BlackRock’s listing standards and remain guided by SEC rules.

“The Exchange’s initial listing standards require, among other things, that the security underlying a listed option be ‘characterized by a substantial number of shares outstanding that are widely held and actively traded,'” the filing said .

BlackRock also proposed listing Ethereum Trust options contracts in August to expand its Ethereum investment tools and make crypto investments more accessible to financial markets.

The SEC approved 11 spot Bitcoin ETFs in January, but delayed approving options for the product until now.

Following the approval of BlackRock’s application, crypto ETF experts anticipate that the SEC will eventually extend approval to other issuers.

“I assume that others will be approved shortly. Huge win for bitcoin ETFs (as it will attract more liquidity, which will in turn attract more big fish),” said Bloomberg analyst Eric Balchunas.

Balchunas also noted that the Office of the Comptroller of the Currency (OCC) and the Commodity and Futures Trading Commission (CFTC) must also give their approval before the options contract for IBIT can go live.