The %Nasdaq (NASDAQ: $NDAQ ) stock exchange is seeking approval from U.S. regulators to offer options trading in %Bitcoin (CRYPTO: $BTC ) to investors.
Nasdaq has applied to the U.S. Securities and Exchange Commission (SEC) to offer options trading on the %BlackRock (NYSE: $BLK ) iShares Bitcoin Trust ETF (IBIT).
The SEC has yet to approve any options trading related to %Cryptocurrencies.
In its application, Nasdaq argues that options trades on a new Bitcoin index will provide investors and traders with a way to hedge their exposure to the world’s largest cryptocurrency by market capitalization.
Options are essentially contracts that give the holder the right to buy or sell an asset, such as a stock or exchange-traded fund (ETF), at a predetermined price by a set date.
Bullish “call” options are bets that an asset’s price will rise within a certain period, while bearish “put” options are bets that the price will decline.
Traders typically use options to boost their investment returns, while institutional investors use them to hedge their risks when making bets on stocks.
Some analysts and regulators view options as risky investment vehicles, going so far as to say that they allow investors to speculate and gamble on the future price direction of stocks.
Under Nasdaq’s proposal, a new “Bitcoin Index Options” would track the CME CF Bitcoin Real-Time Index developed by CF Benchmarks to track Bitcoin future prices and options contracts.
While waiting for regulators to approve or reject options on the new crop of spot Bitcoin ETFs, traders have turned to other products such as leveraged ETFs tied to Bitcoin and run options on those items.
The price of Bitcoin has risen 40% this year and currently trades right around $62,500 U.S.
The stock of Nasdaq has increased 33% in the last 12 months to trade at $70.55 U.S. per share.
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