CBOE Resubmits Application for Bitcoin ETF Options as Approval Looms

CBOE has withdrawn its original application for options on spot Bitcoin ETFs, only to resubmit a more comprehensive version almost immediately.

Following the move, Bloomberg ETF analyst James Seyffart said on X that there is “definitely some movement on Bitcoin ETF options.”

Seyffart clarified that the new filing, a 44-page document, replaced the original 15-page application.

The updated filing includes more detailed information, particularly regarding position limits and concerns over market manipulation.

This suggests that the SEC may have provided feedback, leading to the enhanced application.

Bitcoin ETF Options Could Come by Q4

While it is not confirmed whether the SEC is actively engaging with the CBOE on this matter, Seyffart speculated that the move could be a strategic one to “restart the clock,” potentially pushing the decision deadline back to late April 2025.

Despite this uncertainty, Bloomberg analysts remain optimistic that Bitcoin ETF options could be approved by the fourth quarter of this year.

UPDATE: There's definitely some movement on Bitcoin ETF options.

CBOE just withdrew their application for options on spot #Bitcoin ETFs. Which sounds like a bad thing at first… But at the same time they just re-filed a brand new and updated application https://t.co/L8qYTDXzPb pic.twitter.com/8BQG6JMROn

— James Seyffart (@JSeyff) August 8, 2024

The SEC’s final decision deadline is around September 21, but further steps will be required from the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC) before options trading can commence.

In January, the NYSE American, CBOE, and Nasdaq all filed applications to introduce options trading on spot Bitcoin ETFs.

However, the SEC delayed its decision on CBOE’s application in March and similarly deferred its decision on the NYSE American’s application in April.

The recent resubmission by the CBOE indicates ongoing negotiations and adjustments as the industry awaits regulatory approval.

On August 9, Nate Geraci, president of ETF Store, noted that options are already available on some cryptocurrency derivatives exchange-traded products (ETPs), making the case for their availability on spot ETFs.

Options differ from spot and futures contracts by giving traders the right, but not the obligation, to buy or sell the contract at a predetermined price by a specified date.

If approved, options based on spot Bitcoin ETFs could introduce new investment strategies, such as “covered call writing.”

This strategy involves selling a call option, which grants someone else the right to purchase the underlying asset at a specific strike price.

By doing so, investors can generate regular income from the option premium while limiting risks, as the asset is owned via the spot ETF.

NYSE Applies with SEC to List Options for Ether ETFs

More recently, the New York Stock Exchange (NYSE) American proposed a rule change to list and trade options for three Ether ETFs managed by Grayscale and Bitwise.

The move seeks to include options for the Bitwise Ethereum ETF (ETHW), the Grayscale Ethereum Trust (ETHE), and the Grayscale Ethereum Mini (ETH).

NYSE American said that the introduction of options trading on these Ether ETFs would benefit investors by providing a cost-effective means of gaining additional exposure to Ether.

The SEC is now expected to receive comments on this proposal within the next 21 days.

If approved, the rule change would specifically apply to the Grayscale and Bitwise Ether ETFs, the only spot Ether funds currently listed on the NYSE American exchange.