Harnessing Bitcoin Volatility with MBTX and CBTX Options

Executive Summary:

• Since the introduction of spot bitcoin ETFs last January, total AUM in the space have more than quadrupled to a high of $120B (see chart below). Bitcoin options trading took off as well, with IBIT quickly becoming the 5^th most traded ETF option in 2024 (ranked by ADV), despite not launching until Nov 19^th.
• In December, Cboe® launched the first SEC-regulated cash-settled index options tied to spot bitcoin, with the introduction of Cboe Bitcoin US ETF Index (CBTX) options and Cboe Mini Bitcoin US ETF Index (MBTX) options. The two indices track the same underlying basket of spot bitcoin ETFs, with the key difference that MBTX trades at 1/10^th the size of CBTX (hence the “Mini” in the name). The constituents of the index can be found below.
• Because the index is comprised of individual ETFs that all track the price of spot bitcoin, this allows market makers to tap into the underlying liquidity of the ETFs when pricing MBTX and CBTX options. However, the high correlation (99.9+%) also begs the question – why trade MBTX and CBTX index options when there are already liquid bitcoin ETF options available?
• In this report, we delve into some of the key differentiators for our product, including the larger notional sizes and position limits of the index options as well as the availability of FLEX options which have been critical as we see more options-based strategies launch on bitcoin (e.g. derivative income as well as defined outcome funds). While still early days, we’re starting to see volume grow, particularly in MBTX, with a record of nearly 9k contracts trading on January 31st (~$213M notional). As demand for options-based strategies on bitcoin continue to grow, we anticipate the volume in our CBTX/MBTX options to grow as well. See full report for more details.
• In addition, for those interested in learning more about bitcoin, we’re hosting a webinar next Friday February 21st with Cathie Wood (ARK Invest CEO, CIO, and Founder) and Rob Marrocco (Cboe Global Head of ETP Listings) where we’ll be discussing themes, trends, and tradable products in bitcoin. Register here (pre-registration required).

Exhibit 1: Total AUM in Spot Bitcoin ETFs Have Grown to $120B 

^{Source: Cboe}

Exhibit 2: CBTX and MBTX Index Constituents by Weight 

^{Source: Cboe}

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