BlackRock Bitcoin ETF options approved by SEC, creates hopes of gamma squeeze

The US Securities and Exchange Commission (SEC) has approved Nasdaq to database and commercialized options connected BlackRock’s spot Bitcoin exchange-traded money (ETF) product, iShares Bitcoin Trust (IBIT).

Options trading enables investors to bargain oregon merchantability assets astatine a pre-determined price, helping them speculate connected terms movements. So, this determination marks different measurement toward broadening the scope of Bitcoin-linked derivatives, offering investors much tools to negociate vulnerability to the flagship crypto asset.

However, the merchandise inactive requires the support of the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC).

More Bitcoin ETF-based products

Bloomberg ETF expert Eric Balchunas noted that different large firms mightiness soon person support for their ain Bitcoin ETF options.

He said:

“Huge triumph for the the bitcoin ETFs (as it volition pull much liquidity which volition successful crook pull much large fish).”

Nate Geraci, President of ETF Store, suggested that approving options for spot Bitcoin ETFs could pb to the improvement of much Bitcoin ETF-based products.

Geraci stated:

“Expect a flurry of assorted ETF filings similar Bitcoin buffer oregon defined result ETFs, Bitcoin premium income oregon output max (covered call) ETFs, Bitcoin process hazard ETFs, Bitcoin convexity ETFs.”

‘Gamma compression possibility’

Jeff Park, caput of alpha strategies and portfolio manager astatine plus absorption steadfast Bitwise, pointed retired that Bitcoin options volition apt make beardown organization demand, mounting the signifier for a gamma squeeze.

A gamma compression occurs erstwhile banal prices emergence rapidly due to the fact that marketplace makers bargain much banal to screen their options positions, driven by precocious request for telephone options.

In Bitcoin’s case, Park explained that the Bitcoin ETF options marketplace introduces regulated leverage connected a supply-constrained asset. He added:

“With Bitcoin options, investors tin present marque duration-based portfolio allocation bets, particularly for semipermanent horizons. There’s a bully accidental that owning long-dated OTM calls arsenic premium walk volition springiness investors much bang for their subordinate than a fully-collateralized presumption that could driblet by 80% implicit the aforesaid period.”

The station BlackRock Bitcoin ETF options approved by SEC, creates hopes of gamma squeeze appeared archetypal connected CryptoSlate.