The Securities and Exchange Commission on Friday approved proposals from two major exchanges to list and trade options on several bitcoin ETFs, expanding the suite of crypto-related investment products available to U.S. investors. 
According to SEC filings, Cboe Exchange received approval to offer options on the Fidelity Wise Origin Bitcoin Fund (FBTC) and the ARK 21Shares Bitcoin ETF (ARKB). 
NYSE American was granted permission to list options on the Grayscale Bitcoin Trust ETF (GBTC), Grayscale Bitcoin Mini Trust (BTC), and Bitwise Bitcoin ETF (BITB). 
Trading of spot bitcoin ETFs began in January with the SEC's approval. Friday's decision follows the regulator’s earlier move to permit options trading on BlackRock’s iShares Bitcoin Trust (IBIT), the largest spot bitcoin ETF. 
Read More: SEC Greenlights Options on BlackRock’s IBIT

Both Cboe and NYSE American will implement conservative position limits of 25,000 contracts on the same side of the market for each bitcoin ETF option, as stated in their respective fillings. This limit is lower than those for many other ETF options, reflecting a cautious approach to these new products.

Bitcoin Options Expansion

The introduction of options on bitcoin ETFs provides investors with new tools to manage risk and potentially enhance returns in their crypto-related portfolios. Options allow traders to speculate on future price movements or hedge existing positions without directly owning the underlying assets.

Cboe and NYSE American emphasized in their filing that existing surveillance procedures will apply to the new bitcoin ETF options. Both exchanges are members of the Intermarket Surveillance Group, facilitating information sharing to detect potential market manipulation.

The exchanges also provide data demonstrating the liquidity and trading volume of the underlying bitcoin ETFs.

NYSE American’s filing stated that as of Aug. 30, GBTC had over 284 million shares outstanding and a market capitalization exceeding $13.4 billion. BTC had nearly 367 million shares outstanding, while BITB had about 68.7 million shares outstanding.

According to Cboe’s filing, FBTC had over 201 million shares outstanding as of Aug. 7, with a six-month trading volume of more than 1.1 billion shares. ARKB had about 45.5 million shares outstanding and a six-month trading volume exceeding 297 million shares.

Both exchanges stressed that their rules requiring appropriate customer disclosures and suitability standards will apply to these new options products, aiming to protect retail investors who may be less familiar with the complexities of options trading.

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