The demand in the United States 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, are already nearly half the size of the bitcoin options market of Deribit, which is now eight years old.
As of Monday, there were 2.16 million IBIT options contracts open or active, representing a face 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 100.
The figure is equivalent to 50% of the $23 billion locked in BTC options open on Deribit at the time of this publication. 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 pre-set price at a later date. A call option provides the right to buy and a put offer provides the right to sell.
Just like in traditional markets, traders take advantage of crypto options to speculate or hedge against price movements, volatility, and timing effects (known as theta).
Deribit has maintained a leading position for years, with traders and investors using its bitcoin and ether options to establish complex directional and non-directional strategies. However, the exchange’s offshore status kept American investors looking for regulated avenues in the bay. IBIT options are stepping in to fill that gap.
“With the BlackRock Spot Bitcoin ETF as the underlying asset, IBIT options appeal not only to institutional investors but also to American retail traders who favor regulated markets. This rapidly expanding segment is evident in the growing demand for options IBIT,” said Volmex Finance, a crypto derivatives company. protocol, he 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 CEO Luuk Strijers said IBIT options have created positive ripple effects for the industry.
“IBIT options are predominantly traded by US retail investors, a segment that has not historically had access to Deribit. As such, their activation has not negatively impacted our market activity. If anything, it has created positive effects by introducing new trading opportunities. arbitrage and facilitate enhanced risk offloading strategies for institutional participants as Deribit continues to act as the global risk and volatility repository,” Strijers told CoinDesk.
Strijers explained that activity in IBIT options is concentrated in short-term options, indicating demand for options with lower premiums (prices).
