The rise of options-based ETFs is opening new opportunities for both retail and institutional investors, particularly in markets like bitcoin.
Roundtable anchor, Rob Nelson, explored the implications of these financial tools with Gav Blaxberg, CEO of WOLF Financial, and Mauricio Di Bartolomeo, Co-Founder and CSO of Ledn . The conversation delved into how these products are reshaping strategies for corporations, traders, and investment managers alike.
Blaxberg highlighted the dual appeal of ETF options, saying, "It's significant for both retail and institutions. Institutions are the main traders of options, using them for leverage and hedging. Retail traders with large liquidity will also find them attractive, especially for leveraging long-term positions like bitcoin." He acknowledged, however, that institutions like hedge funds and large trading firms are likely to be the primary users.
Nelson raised the potential for big tech companies to leverage ETF options, particularly as some, like Microsoft, begin integrating bitcoin into their portfolios. "I could see even really big corporations moving one or 2% [of their cash holdings]. It’s starting to make fiscal sense. It’s not a huge gamble when treasury reserves aren't worth much," he observed.
Di Bartolomeo agreed, emphasizing that public announcements of bitcoin purchases are not only good for news cycles but also for financial benefits. "Saying you're going to buy bitcoin gets you in the news, oversubscribed bonds, and 0% yield," he noted. He also pointed out that options provide companies with tools to hedge their positions, making them more comfortable with bitcoin allocations.
He elaborated on the utility of options for investment managers. "Thousands of managers with bitcoin on their balance sheet would likely put a hedge on that position right now to lock in their gains. Retail traders, too, are drawn to options for their high volatility and the ability to make big moves with less capital."
Looking ahead, Di Bartolomeo predicted the emergence of innovative financial products tied to these tools. "You're going to start seeing a bunch of covered call ETFs and yield-producing bitcoin funds. This is just the beginning of so many new financial products," he concluded, signaling a dynamic shift in the market’s future.