Cboe Unveils Bold Proposal for Options on Spot Ethereum ETFs

• Cboe files to add options for Ethereum-backed ETFs, including Bitwise.
• Spot ETH ETF options aim to boost liquidity and hedge risk.
• Ethereum ETFs see record $1.5B volume, increasing market interest.

Cboe BZX Exchange is making waves in the crypto market by proposing options trading on spot Ethereum ETFs. This strategic move aims to bring new opportunities for institutional and retail investors as well as enhance liquidity in the market.

Cboe Proposes Ethereum ETF Options

Cboe BZX Exchange has proposed amending Rule 19.3 to enable options trading on spot Ethereum exchange-traded funds (ETFs). The exchange submitted this proposal following a similar proposal from NYSE American. The U.S. Securities and Exchange Commission (SEC) is currently reviewing NYSE’s application.

The proposal includes Ethereum-backed funds, such as the Bitwise ETH ETF, Grayscale ETH Trust, and Grayscale ETH Mini Trust. These funds are established as trusts and hold ether, similar to other asset-backed ETFs, such as Bitcoin ETFs. Cboe BZX stated that the proposal will offer investors a new tool to access ETH and reduce trading costs.

Options trading on Bitcoin ETFs started in November 2024, and the success of this model has driven Cboe’s push for ETH options. The exchange emphasizes that adding options for spot ETH ETFs will improve liquidity. These options could provide institutions with a valuable hedge and create additional exposure for retail investors to ETH.

Impact of ETH options trading

The proposed amendments would help increase market liquidity and contribute to price discovery. Cboe BZX believes that this expansion will reduce volatility in the long run despite initial uncertainty in market conditions. Investors will have access to new strategies, such as hedging with options on ETH funds, further supporting the overall ecosystem.

The proposed options trading will provide large institutional investors exposure to Ethereum price movements. These investors often use options to hedge their positions and be able to mitigate risks in volatile markets. However, retail traders may also benefit from these options, providing additional speculative trading opportunities.

Price Action

Ethereum ETFs have seen significant success, with nine spot ETH ETFs recording huge trading volumes in recent weeks, reaching a record $1.5 billion. This volume surpassed the previous high of $1.22 billion set in December 2024 which indicates the rising investor interest in Ethereum-backed funds.

Ethereum’s recent price volatility has highlighted the demand for innovative financial products in the crypto market. In the last 24 hours, ETH’s price has dropped by 1.62% to around $2,746. However, ETH also saw a substantial $40.2 billion in trading volume during the same period.

As more institutional players engage with these products, Cboe’s proposed changes may help enhance market efficiency. ETH options show the growing mainstream acceptance of cryptocurrency investments.