Cboe Eyes Options Trading on Fidelity's Ethereum Fund Soon
Published Date: 2/13/2025
Notice
Summary
Cboe EDGX Exchange wants to start offering options on the Fidelity Ethereum Fund, letting investors trade new types of contracts tied to this popular crypto fund. This change affects traders and investors looking for fresh ways to invest in Ethereum through a trusted fund. The proposal was filed in early 2025 and is now open for public comments before it can go live.
Analyzed Economic Effects
5 provisions identified: 5 benefits, 0 costs, 0 mixed.
Proposal to List Ethereum Fund Options
Cboe EDGX filed a proposal on January 24, 2025 (Amendment No. 1 on February 3, 2025) to list options on the Fidelity Ethereum Fund. If approved, investors who hold or trade investments could buy and sell listed options tied to the Fidelity Ethereum Fund on the Exchange instead of trading similar contracts over-the-counter.
Listed Options Provide Market Protections
The filing says listing options on the Fidelity Ethereum Fund would let investors trade in a listed environment with benefits over OTC trading, including (1) enhanced efficiency in initiating and closing positions, (2) increased market transparency, and (3) heightened contra‑party creditworthiness because the Options Clearing Corporation (OCC) is issuer and guarantor of listed options.
Exercise Style and Expiration Terms
The proposed Fidelity Fund options would be physically settled American-style contracts. The Exchange would open at least one monthly expiration at commencement of trading and may list weekly, monthly, quarterly expirations and long-term equity option series (LEAPS) that expire from 12 to 39 months from listing.
Position and Exercise Limit Set at 25,000
The Exchange proposes a position and exercise limit of 25,000 same-side option contracts for Fidelity Fund options. The filing states that 25,000 contracts equate to 2,500,000 underlying shares if exercised, and using a share price of $34.37 (as of December 23, 2024) equals $85,925,000 in value; the filing also notes this would represent approximately 6.0% of the Fund's 41,700,000 outstanding shares and about 0.02% of the Ethereum market capitalization using December 23, 2024 figures.
Strike Intervals and Minimum Increments Defined
The filing specifies strike price intervals and minimum quoting increments: strike intervals will be $1 or greater when strike price is $200 or less and $5 or greater when strike price is over $200; the Exchange may also use $1, $0.50, $2.50 and $5 strike programs. Under Rule 21.5, where the option price is less than $3.00 the minimum increment will be $0.05, and where the price is $3.00 or higher the minimum increment will be $0.10.
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