Bitcoin option

Information that no one really talks about is the SEC approval of options on BlackRock's Bitcoin ETF (IBIT), which are essentially options on Bitcoin.

What is an option? An option is the right (not the obligation) to buy or sell an asset at a certain price. There are two types - a call option (gives the right to buy), and a put option (gives the right to sell).

For example, Bitcoin is currently at $60,000 and you buy one call option contract for $1,500 that Bitcoin is at $65,000. Therefore, you are buying the right to buy Bitcoin at $65,000 for $60,000. If the price of Bitcoin reaches $65,000, then you are essentially buying Bitcoin for $5,000, and then we subtract the premium (the option price) and get $3,500. Therefore, you made $3,500 on this transaction.

How will this affect the market? First, it gives a new type of investor an opportunity to enter the market, and also provides a hedge for ETF holders, since the underlying asset is Bitcoin. Volatility in the market is everything, and therefore a new opportunity for institutions to take advantage of it.

Second, the new instrument should stimulate large investments in the ETFs themselves, since there will already be a hedge strategy for investors.

For us, retail, the main benefit of having options is increasing exposure to the world of TradFi, and therefore greater recognition and acceptance of the sector as one of the investment areas.