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Bitcoiner News
SEC Approves Options on ETFs
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The SEC has given the green light for options trading on Bitcoin ETFs available on major U.S. exchanges, including the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE). This decision now allows investors to engage in options trading with Bitcoin ETPs such as the Grayscale Bitcoin Trust, Grayscale Bitcoin Mini Trust, and the Bitwise Bitcoin ETF.

Further, the SEC has expedited the approval for options trading on other spot Bitcoin ETFs including the Fidelity Wise Origin Bitcoin Fund, the ARK21Shares Bitcoin ETF, and the Invesco Galaxy Bitcoin ETF, which can be traded on these exchanges.

The filing details the conditions for these securities, highlighting that options trading will facilitate hedging strategies, enhance liquidity, and possibly decrease volatility within these Bitcoin ETFs.

Under the amended rules, these options can be listed and traded under Rule 915, aligning Bitcoin ETFs with other commodity-based ETPs, such as those backed by gold or silver.

The SEC has imposed stringent position and exercise limits on these Bitcoin options. Specifically, a cap of 25,000 contracts for Bitcoin Fund options has been set, which corresponds to approximately 0.9% of the outstanding shares for GBTC, 0.7% for BTC, and 3.6% for BITB.

Both the NYSE and its affiliate, NYSE Arca, are committed to sharing surveillance data with the Chicago Mercantile Exchange (CME) to closely monitor trading and detect any suspicious activities across both spot and futures markets. The strong correlation between CME Bitcoin futures and the spot market aids in identifying any potential manipulation, enhancing investor protection.

Moreover, the SEC pointed out that the limits placed on these options are among the most restrictive in the industry, ensuring a conservative trading environment suitable for large investors and hedge funds.

The document also explains how the structure of Bitcoin funds like GBTC, with their creation and redemption mechanisms, prevents any single entity from monopolizing the market, thus minimizing potential market impacts even if multiple parties reach the maximum position limits.

This approval marks a significant advancement in merging Bitcoin with traditional financial markets.