Nasdaq just filed with the U.S. Securities and Exchange Commission to list and trade Bitcoin Index Options.

These options will track the price of Bitcoin (BTC) represented by the CME CF Bitcoin Real-Time Index, according to a press release. These options aim to provide increased transparency and reliability to the crypto market.

Pending regulatory approval, this initiative would allow investors to better manage and hedge their crypto positions, thereby enhancing liquidity and maturity within this digital asset class.

The options will feature European-style exercise and cash settlement, with final settlement values determined by the CME CF Bitcoin Reference Rate — New York Variant. This means the options are settled in cash, not Bitcoin.  

This benchmark provides a clear reference rate that will be pegged to a specific time, crucial in a market like crypto, characterized by continuous global trading.

If approved, the Nasdaq Bitcoin Index Options will offer institutional and retail investors an alternative risk management tool, complementing existing futures and options contracts tied to Bitcoin.

The proposed index options are listed as a cost-effective way to magnify exposure to Bitcoin, giving institutional investors and traders an alternative method to hedge their exposure to the world’s largest cryptocurrency.

Similarly, earlier this year, the SEC approved spot Bitcoin ETF trading, which led many large financial institutions to file for their own spot Bitcoin ETFs.

Nasdaq is partnering with CF Benchmarks to make this possible.