Options Tied to BlackRock’s Bitcoin ETF Surge to Nearly 50% of Deribit’s BTC Open Interest in Two Months

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What to know:

  • Notional open interest in IBIT options stood at $11 billion on Monday.
  • That’s nearly 50% of $23 billion in open interest in Deribit’s BTC options.
  • IBIT options have not negatively impacted Deribit’s business, Deribit’s CEO said.

The stateside demand for regulated crypto products is real.

The U.S. Securities and Exchange Commission-approved option contracts linked to BlackRock’s Bitcoin (BTC) exchange-traded fund, which was launched on November 19, are already nearly as large as Deribit’s eight-year-old bitcoin options market. In simpler terms, the value of these new option contracts is close to that of Deribit’s long-standing bitcoin options market.

On Monday, it was found that there were approximately 2.16 million active or open IBIT options contracts available, as reported by optioncharts.io. This total value, which amounts to around $11 billion, is calculated by taking the number of contracts and multiplying it by the price of the ETF, then by a standard lot size of 100.

At the current moment, the total amount stands at half (50%) of the 23 billion dollars tied up in Bitcoin options on Deribit. Each option contract on Deribit is equivalent to one Bitcoin.

Derivative agreements, which people can purchase, grant them the option to either acquire or dispose of the underlying asset at a predetermined cost in the future. In other words, a ‘call’ option allows one to buy, while a ‘put’ option provides the chance to sell.

Just like conventional trading, people use cryptocurrency options to gamble on or protect themselves from changes in prices, market volatility, and the influence of time (often called theta), in a similar manner.

For quite some time, Deribit has been a front-runner, offering traders and investors the opportunity to create intricate directional and non-directional strategies using its bitcoin and ether options. Yet, due to its offshore location, American investors seeking regulated platforms have been left on the sidelines. Now, IBIT options aim to bridge that divide.

According to Volmex Finance, who communicated this through an email to CoinDesk, the appeal of IBIT options isn’t limited to institutional investors; even U.S. retail traders drawn towards regulated markets are showing interest. This growing segment is reflected in the rising demand for IBIT options due to its underlying asset being BlackRock’s spot Bitcoin ETF.

Volmex pointed out that the rising preference for IBIT options is posing a challenge to Deribit’s leadership position in the cryptocurrency options market. Yet, Luuk Strijers, CEO of Deribit, noted that the emergence of IBIT options has triggered favorable waves throughout the industry.

Strijers stated to CoinDesk that IBIT options are primarily traded by U.S. retail investors, a group previously unable to utilize Deribit. Since their activation, these changes have not decreased our market activity but rather brought about favorable outcomes, such as generating new arbitrage opportunities and improving risk management strategies for institutional investors. Deribit remains the global hub for managing risk and volatility.

Strijers pointed out that most trades in IBIT options involve shorter expiration dates, suggesting a preference for cheaper, shorter-term options.

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2025-01-14 12:38