The trading of Bitcoin spot ETF options has officially launched, with BlackRock's iShares Bitcoin Trust (IBIT) being the first to roll out. Following the U.S. Securities and Exchange Commission's approval of 11 Bitcoin ETFs, companies are actively seeking to list and trade options for their spot Bitcoin funds. IBIT is the first Bitcoin ETF to receive options approval, with assets under management nearing $45 billion. Options and derivatives provide liquidity and price discovery for large institutions, typically used for hedging trades, while retail investors use them for speculation. Market analysts believe that options trading will reduce Bitcoin's volatility. Grayscale has also quickly submitted an updated prospectus for its Bitcoin covered call ETF.

Options trading on spot Bitcoin exchange-traded funds officially went live Tuesday, with BlackRock's iShares Bitcoin Trust (ticker IBIT) kicking things off."With the approval of options on Bitcoin ETFs, we’re not just seeing the maturation of the crypto ETF market — we're watching Bitcoin cement its place alongside stocks, bonds, and commodities as a mainstream institutional investment,” Nathan McCauley, CEO and Co-Founder of Anchorage Digital, said in a statement shared with The Block.Firms have been looking to list and trade options for their spot bitcoin funds following the SEC's approval of 11 BTC ETFs in January.BlackRock's IBIT, the largest Bitcoin ETF with assets under management nearing $45 billion, was the first to be approved for options by the U.S. Securities and Exchange Commission on Sept. 20. The clearing process reached its final steps over the past four days, with IBIT options receiving final approval for trading on Monday afternoon.Options on the Bitwise Bitcoin ETF (BITB) are expected to begin trading on Wednesday, Bitwise CEO Hunter Horsley said on X.Trading volumes for spot Bitcoin ETFs have exceeded $500 billion since trading began in January, according to The Block's data dashboard.Options and derivatives provide liquidity and price discovery for larger institutions, giving them exposure to the underlying asset's price action (in this case, bitcoin). Large institutions typically use options as a trading hedge, while retail traders use options for speculation. “[T]he Bitcoin ETF options market is the first time the financial world will see regulated leverage on a perpetual commodity that is truly supply-constrained,” Jeff Park, head of alpha strategies at Bitwise, said in September. “Things will likely get wild. In such scenarios, regulated markets may shut down. But the remarkable thing about Bitcoin is that there will always be a parallel, decentralized market that can’t be shut down.”Bitcoin has a massive retail following, which means it is likely there will be more speculation in spot bitcoin ETF options when compared to ETF options on equities, according to market structure analyst Dennis Dick.“Counter to common opinion, options actually reduce volatility,” Dick told The Block earlier this year. “As open interest rises, it creates natural buyers and sellers on both sides of the market… This thickens up the market and increases liquidity, which therefore reduces volatility.”Dick expects the volatility of bitcoin to be reduced as more interest comes into trading the options on the spot BTC ETFs.The price of bitcoin traded around $93,885 at publication time, and its market cap was $1.9 trillion, according to The Block's BTC price data.“When Bitcoin ETFs were approved less than a year ago, it was one small step for crypto that represented a giant leap for institutional adoption," McCauley said. "In the months that followed, the asset class has continued to evolve into a sophisticated institutional market that's rife with opportunity for more hands-on participation."Within the first few hours of trading, the data showed the ETF options were a huge success.Grayscale wasted little time to file an updated prospectus for its Bitcoin Covered Call ETF. The fund will offer exposure to GBTC and BTC while writing or buying options contracts on Bitcoin ETPs for income.“Grayscale is thrilled that Options trading on both GBTC and BTC will begin...further developing the ecosystem around our US-listed Bitcoin ETPs," David LaValle, Global Head of ETFs at Grayscale Investments, said in a statement. "There is unprecedented client demand for Bitcoin ETPs, and the Grayscale team is proud to offer a suite of Bitcoin products that promote investor choice, including the lowest cost Bitcoin ETP, and enable convenient exposure to Bitcoin and the crypto asset class.”

Bitcoin spot ETF options trading has been launched, with IBIT being the first to introduce it.