Options on bitcoin ETFs could come soon, offering hedging tool for institutions

Following the US Securities and Exchange Commission’s milestone approval of spot bitcoin ETFs earlier this month, options for these funds might soon be available.

Such derivatives could prove an important tool for institutional investors looking to hedge risk, according to industry participants — and are expected to come without many hurdles.

An option is a contract representing the right to buy or sell a financial product at a certain price for a specific period of time. ETF options saw average daily volumes amounting to roughly 17.9 million contracts in 2023, according to Options Clearing Corporation (OCC) data — a 12% increase from the prior year.

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