The demand in the United States for regulated crypto products is real.
US SEC-approved options linked to BlackRock’s spot bitcoin (BTC) exchange-traded fund (IBIT), which debuted on November 19, are already nearly half the size of Deribit’s bitcoin options market , eight years old.
As of Monday, there were 2.16 million open or active IBIT options contracts, representing a notional value of $11 billion, according to data source optioncharts.io. This notional value is obtained by multiplying the open interest by the ETF price and lot size 100.
The total equates to 50% of the $23 billion locked in BTC options open on Deribit at the time of publication. An option contract on Deribit represents one BTC.
Options are derivative contracts that give the buyer the right to buy or sell the underlying asset at a predefined price at a future date. A call gives the right to buy and an offer to sell gives the right to sell.
Similar to traditional markets, traders leverage crypto options to speculate or hedge against price movements, volatility, and the effects of time (known as theta).
Deribit has held a leading position for years, with traders and investors using its Bitcoin and Ether options to implement complex directional and non-directional strategies. However, the exchange’s offshore status has kept away U.S.-based investors seeking regulated avenues. IBIT options step in to fill this gap.
“With BlackRock’s Bitcoin Spot ETF as the underlying asset, IBIT options are appealing not only to institutional investors but also to U.S. retail traders who favor regulated markets. This rapidly expanding segment is evident in the growing demand for “IBIT options”, Volmex Finance, a crypto derivatives company. protocol, told CoinDesk in an email.
Volmex added that the growing popularity of IBIT options challenges Deribit’s dominance in the crypto options market. However, Luuk Strijers, CEO of Deribit, said the IBIT options had created positive ripple effects for the sector.
“IBIT options are primarily traded by U.S. retail investors, a segment that has historically not had access to Deribit. As such, their activation has not had a negative impact on our marketplace activity. On the contrary, it has created positive effects by introducing new arbitrage opportunities and facilitating enhanced risk offloading strategies for institutional participants as Deribit continues to act as a global repository of risk and volatility.” , Strijers told CoinDesk.
Strijers explained that IBIT options activity is concentrated on short-dated options, indicating demand for lower premium (priced) options.
