What You Need to Know:
- Notional open interest in IBIT options reached $11 billion on Monday.
- This is close to 50% of the $23 billion open interest on Deribit's BTC options.
- IBIT options have not adversely affected Deribit, according to their CEO.
The demand for regulated crypto products is evident as the U.S. SEC approved options tied to BlackRock's bitcoin ETF (IBIT), which launched on Nov. 19 and has quickly approached half the size of Deribit's established bitcoin options market.
As of Monday, there were 2.16 million open contracts for IBIT options, giving a notional value of $11 billion, calculated by multiplying the open interest by the ETF's price and the lot size (100).
This represents 50% of the $23 billion currently locked in open BTC options on Deribit. One contract on Deribit corresponds to one BTC.
Options are contracts that grant the buyer the right to purchase or sell the underlying asset at a predetermined price at a future date. A call option grants the right to buy, while a put option allows selling.
Traders often use options to speculate on or hedge against price fluctuations, volatility, and time decay.
Deribit has maintained a leading role for years, allowing traders to utilize its bitcoin and ether options for complex strategies. However, U.S.-based investors have historically stayed away due to its offshore status, which IBIT options now address.
"IBIT options are appealing not just to institutional investors but also to U.S. retail traders who prefer regulated trade spaces," stated Volmex Finance, a crypto derivatives protocol, in an email to CoinDesk.
They further noted that the rise of IBIT options is challenging Deribit's market position. Still, CEO Luuk Strijers mentioned that this new offering has beneficial impacts on the market, creating arbitrage opportunities and aiding institutional strategies.
Strijers remarked: "IBIT options are primarily traded by U.S. retail investors, a group previously barred from Deribit. Their entry has not detracted from our market, rather it has fostered positive effects and introduced new strategies."
