BlackRock’s Bitcoin ETF Options Record Historic Day 1: Recap

by

As a seasoned analyst with over two decades of experience in the financial industry, I have witnessed numerous historical milestones, but few compare to the debut of BlackRock’s Bitcoin ETF options. The sheer volume of trading on the first day was astounding and a testament to the growing mainstream acceptance of digital assets.

As a researcher, I’m excited to share my insights about the groundbreaking debut of BlackRock’s Bitcoin ETF options, which saw an astonishing $1.9 billion worth of transactions on its first day. Jeff Park, the Head of Alpha Strategies at Bitwise Invest, provided a comprehensive analysis of this event, offering valuable insights and key observations from the inaugural trading day.

Today kicked off a significant milestone – the initial launch of BTC ETF options! And it certainly lived up to expectations, with an impressive $1.86 billion in total trades! Park couldn’t contain his excitement and shared a series of insights detailing the top 10 most intriguing observations he made throughout the day.

BlackRock’s Historic Bitcoin ETF Options Day 1

By 9:45 AM, Park observed that the market had developed a “volatility pattern resembling a broad grin,” which grew and became more pronounced as the day unfolded. In his words, “This smile expanded significantly throughout the day, ending with higher ‘cheeks’ by the end of trading hours.

Examining the BVIV Index from Volmex Finance, Park noted that the changes in implied volatility (IV) were not consistently linked with Bitcoin’s trend in price movement. Intriguingly, this pattern did not follow the usual upward slope of Bitcoin’s price rise and subsequent fall in a foreseeable manner, he added.

The 01/17/24 C55 call option was the one most actively traded, with over 40,000 contracts exchanged. Park highlighted that this specific contract had already gone beyond its position limit of 25,000. “Just as I mentioned yesterday,” he noted, “the 25k limit appears insufficient given the significant liquidity IBIT has consistently shown during these past months.

Park was particularly intrigued by the 12/20/24 C100 call option, which he described as “a true lottery ticket.” Trading at an implied volatility of 105% and with a delta of just 3%, this option saw heavy volume early in the trading day. “The implied vol cleared at 105%. Even more interesting was how heavy the volume was at the first hour of the market open. It means a serious investor was loading it up at 10AM, and the price steadily increased with vol getting bid up. This was likely the been the biggest vega opportunity of the day,” he explained.

1 in favor of call options. This suggests that investors are very optimistic about the market’s future, particularly for contracts expiring in 2026/2027, where this optimism is even stronger at around 10:1. Park pointed out this trend, indicating a highly bullish sentiment among investors.

Although some might think otherwise, MicroStrategy’s (MSTR) options trading continued to thrive even after the introduction of IBIT options. As noted by Park, MSTR’s volume decoupled significantly with Bitcoin in the last hour, actually closing higher than where it began the day. In Park’s opinion, “MSTR is in a league of its own,” suggesting that the company’s stock maintains an independent and unique investor base.

In the future, Park discussed the impending release of BITB option chains. He noted that this would provide an additional selection alongside IBIT and other options for investors to evaluate before making buying/selling decisions and identifying potential value spots. Park strongly believes that individual trading will lean towards non-IBIT ETFs, which could present more chances for experienced retail investors.

James Seyffart, an expert at Bloomberg ETF, offered further clarification regarding trading volumes. On its first day, IBIT’s options totaled approximately $1.9 billion in exposure traded across 354,000 contracts. Out of these, 289,000 were call options and 65,000 were put options, resulting in a ratio of about 4.4 calls to every put. According to Seyffart’s observation, these options might have played a significant role in Bitcoin hitting new record highs on the same day.

When crypto analyst James Van Straten inquired about potential targets and maximum allowed positions, Seyffart conceded the restrictions. “The 25k position limit is probably a factor of volume and Open Interest for the near term,” he replied. As for why these limits are in place, Seyffart clarified, “Not common practice—no. However, the SEC and CFTC had concerns about market manipulation and other issues. These restrictions were necessary to secure approval!

At press time, BTC traded at $93,404.

Read More

2024-11-21 07:42