Original author: Shaurya Malwa

Original Title: Bitcoin ETF Options Attract $2B on Day One, Shifting BTC’s Market Structure

Source: Coindesk

Compiled by Koala, Mars Finance

IBIT Options first went live on Tuesday, and market participants generally expect this move to attract more institutional interest in Bitcoin (BTC). Here is the impact they might have on the market.

On the first day of trading, the nominal exposure of IBIT Options is close to 2 billion US dollars, which is an unusual volume for a new Options. Compared with put options, call options have more volume (ratio of 4.4:1), which may be the reason for BTC's new high.

The introduction of IBIT Options is expected to increase institutional participation in Bitcoin, as Options provide new avenues for investment and Risk Management strategies.

Trading Options on IBIT can increase Liquidity, provide hedging tools and allow speculation on BTC PA, which can affect price movement and lead to changes in market structure.

Options linked to the Belldex BTC exchange-traded fund IBIT accumulated a nominal exposure of nearly 20 billion US dollars at its first appearance, a feat that some analysts called "unprecedented" in these metrics.

"The nominal exposure of the first day of Options was slightly lower than $1.9 billion, traded through 354,000 contracts. 289,000 were call options and 65,000 were put options," Bloomberg Intelligence analyst James Seyffart said in an X-posting. "This ratio is 4.4:1."

"These Options are almost certainly part of today's #Bitcoin hitting a new all-time high," Seyffart added, pointing out that BTC set a new high after the US session on Tuesday.

IBIT Options first went live on Tuesday, and market participants generally expect this move to attract more institutional interest in Bitcoin (BTC). In September, the US Securities and Exchange Commission approved several SpotBTC ETFs among 11 listed on several exchanges, with a few Options expected to go live in the coming days.

Expand Options

Options are a type of financial Derivatives that give the buyer the right, but not the obligation, to buy (call options) or sell (put options) the underlying asset at a specified price on or before a certain date.

Call options give holders the right to buy assets at a specified price (called the strike price) within a specified period of time. Put options give holders the right to sell at the strike price within a specified period of time.

When the expected price pumps, call options will be purchased; if the prediction is correct, traders can exercise the options to buy or sell at a profit. Put options can serve as insurance for a price drop or bet on a decline, and can be sold at the exercise price if the price falls below the market value.

How does IBIT Options change the BTC market structure

Using Options can open up a wide range of trading strategies for professional investors - this may bring more Liquidity to the market and impact market structure.

Institutions that are particularly unwilling to trade through unregulated offshore channels can use IBIT Options to hedge against the rise risk, while selling call options to generate additional income. Speculators can profit from price fluctuation using IBIT call options and put options, while avoiding the trouble of owning the underlying assets.

Traders can also sell Options and earn premiums, which is a passive income and is particularly attractive in stable or slow declining markets, as Options may expire worthless. Such strategies have been popular among traders compared to leading Options exchange Deribit.

When it comes to the impact on the market structure, some analysts believe that the anticipated IBIT call options coverage will suppress long-term implied Volatility. In the short term, especially during a Bull Market, investor demand for call options may lay the foundation for gamma squeezes like GameStop's.

Market structure is a popular description of how trading involves participants such as investors and traders, the buying and selling of assets, and the regulation of specific asset classes.

Options provides more trading options, making it easier for professional investors to buy or sell without significant price changes. Tracking Options data can show what changes traders expect in prices, helping everyone understand market expectations.

Near the expiration date, Options can also predict and cause price Fluctuation, creating a window for short-term trading.