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Comparing IBIT & CBOE to BTC Options on Deribit

Cointime Official

From Derbit insight

Since this week the crypto derivatives market offers various platforms for trading Bitcoin options, most notably the iShares Bitcoin Trust ETF (IBIT) options in the U.S. and the BTC options on Deribit and soon the ETF index options on CBOE.

Understanding their differences is crucial for traders and investors.

  • Deribit options were launched in 2016 and the platform has about 80% market share of the global BTC options markets. It is the only option available that actually tracks BTC and is not a wrapped or derived version.
  • Deribit is the only exchange that accepts BTC as collateral unlocking several trading strategies and efficient margining, particularly for short positions.
  • Deribit is not available for US persons hence IBIT and CBOE options are good alternatives to deploy options strategies for people in the US.
  • Due to the fact that IBIT & CBOE options track a derived product, the strikes refer to that derived product as well and thus need to be converted to reflect BTC prices.

Product Comparison

Deribit BTC Options: Deribit offers options directly on Bitcoin, allowing traders to speculate on Bitcoin’s price without it being wrapped in another product. These options are available in various maturities and strike prices, and trade 24/7.

IBIT Options: Launched in November 2024, IBIT options are tied to the iShares Bitcoin Trust ETF, a spot Bitcoin ETF listed on NASDAQ. These options provide exposure to Bitcoin’s price movements through a regulated financial product. The ETF trades at a different price versus Bitcoin.

CBOE CBTX Options: Cash-settled options linked to a basket of spot Bitcoin ETFs. Cboe Bitcoin U.S. ETF Index is a modified market cap-weighted index is designed to track the performance of a basket of spot Bitcoin ETFs listed in the U.S. These are European-style, meaning they are exercisable only on the expiration date, eliminating the risks of early assignment, like the Deribit options.

European vs American options

European options can only be exercised at expiration, whereas American options can be exercised at any time before expiration. European options tend to have lower premiums (=cheaper) due to their more limited flexibility. European options benefit traders looking for simpler pricing models and lower costs, making them ideal for certain strategies.

Prices and Strikes

At the moment of writing the IBIT ETF trades at USD 56 while BTC trades at approx USD 99k.

Deribit strikes refer to the BTC price but the ETF options strike refers to the price of the ETF itself. The USD 62 strike is therefore approx 10% above the current spot price and would imply a strike in BTC terms of roughly USD 110k. A strike of USD 110 would mean BTC needs to double and implies a BTC price of approx USD 200k.

For an ETF option, one option contract equals 100 shares of the underlying ETF. So trading 1 ETF option for a USD 10 premium means a total premium of USD 1000 is traded. For Deribit, each option contract represents 1 BTC.

Collateral Used

IBIT Options: Settled in shares of the IBIT ETF, these options are based on the performance of the ETF, which tracks Bitcoin’s spot price. Investors do not hold actual Bitcoin, and they use USD as collateral via their broker of choice.

Deribit BTC Options: Cash settled in Bitcoin, these options require traders to use Bitcoin or other crypto currencies (including for example ETH or USDC) as collateral. This enables easy covered call strategies utilising the BTC a client already holds.

Market Structure

In the U.S., options fungibility ensures that standardised options contracts can be traded across multiple exchanges and brokers seamlessly. This is made possible through centralised clearing and open interest management by the Options Clearing Corporation (OCC).

Here’s how it works with an example:

  • A client, trading through Broker A, decides to buy a call option on IBIT with a strike price of $100 expiring in January 2025.
  • The order is routed to MIAX (Miami International Securities Exchange), where the order is executed. Once executed, MIAX sends the trade details to the OCC, which acts as the central clearinghouse.
  • A few days later, the same client decides to close the position but finds better liquidity or pricing on the Nasdaq Options Market. The client, still trading through Broker A, sells the same contract on Nasdaq.
  • Because the OCC centrally manages all open interest, the sell order on Nasdaq offsets the original buy order on MIAX. The OCC recognizes that the client has effectively closed their position, regardless of the exchange where the trades occurred.
  • This seamless process is possible because options contracts in the U.S. are fungible—standardised by the OCC in terms of Underlying Asset, Expiry date, Strike price and Contract size.

Deribit options are executed via one integrated silo, where Deribit acts as the broker, onboarding the client, performing KYC etc, and also executing a client’s order against the other Deribit client on the other side of the trade. Execution takes place on Deribit, and it is also Deribit that ensures clients maintain sufficient margin to support their positions. Deribit also custodies the client’s funds, unless the client chooses to use one of the many third-party custodians offered.

Unlike the standard US setup, the CBOE options are not fungible and can only be traded on Cboe Options Exchange. Traders cannot move these options to or execute them on other exchanges, which limits their flexibility compared to fungible options

Settlement

  • Deribit options are cash-settled, so only the intrinsic value of the option is paid at expiry. However, rather than being paid in USD, the amount is first converted to the equivalent amount of BTC, and then paid as BTC.
  • IBIT ITM options expire to shares => ITM options at settlement result in actual IBIT ETF positions.
  • Like Deribit, the CBOE options are also cash settled, at the expiry of the instrument the USD P&L (if any) will be settled.

Example

A client has an IBIT call option with a strike of USD 56 (which is approximately USD 100k BTC price). The BTC price at expiry is USD 200k which results in the ETF closing at USD 112 at expiry. The client has the right to buy 100 shares at USD 56, and does so when exercising. These shares can be sold immediately at USD 112, enabling the client to pocket the gains.

On Deribit the P&L payment is simpler as there is no share position to deal with. The client is entitled to the difference between the settlement price (USD 200k) and the option strike (USD 100k), payable in BTC. The P&L therefore is the USD 100k gain (200k-100k) which is converted into bitcoin at the current rate of USD 200k, resulting in a payment of 0.5 BTC (100k/200k).

Margins

Margin requirements for options trading differ significantly between Deribit and U.S. markets, primarily due to differences in risk modelling and collateral standards.

Deribit uses a 16% price move simulation for portfolio margining. This lower (and higher) stress-test threshold reflects the high volatility of cryptocurrencies and assumes that price swings within this range are manageable for most portfolios. Most U.S. clearers now require a 100% price move for margin calculations.

For market makers and traders shorting options, this results in relatively low margin requirements on Deribit, freeing up capital for additional trades or other investments. U.S. options markets can require traders to hold collateral equal to a significant proportion of notional value of the underlying asset to cover extreme risk scenarios which is not efficient.

Statistics

Deribit

Deribit stats information can be found on various locations, for example:

IBIT Options

On this page the IBIT daily data can be found:

  • Enter Options Symbol (IBIT) & date to get the data.
  • OCC portal will show double-sided turnover, to get normal data this has to be divided by 2.

So on the first day 709912 contracts were traded / 2 = 354,606 contracts traded.

To compare that to Deribit you have to multiply by 100 shares (ETFs) and the price of the underlying, in this case IBIT, so 354k * 100 * 52.7 = USD 1.86 billion notional or 20,312 BTC (notional divided by BTC price).

CBOE Options

Position Builder

To explore options a bit deeper and see the impact of price and/or volatility moves on your portfolio, Deribit’s Position Builder is the ultimate tool for seamless portfolio management and analysis.

Whether you’re a seasoned trader or exploring new strategies, this powerful platform offers:

  • Simulated and real Positions: Test P&L, margins, and scenario impact before executing trades.
  • Portfolio Margin Insights: Analyse margin requirements and risk across both Standard and Portfolio Margin models.
  • Advanced Features: Integrated volatility shifts, index rate analysis, and even cross-collateral margining.
  • Dynamic Tools: Effortlessly visualise liquidation points, Greeks, and margins in real-time or with static data.

With the ability to group positions, slide expiries, and even simulate equity adjustments, Deribit’s Position Builder puts you in control of your portfolio. And the best part? You can even use it without logging in.

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