NYSE American LLC Proposes Rule Change that Permits Option Trade on 3 Ether ETFs
In a notable move, NYSE American LLC has proposed a rule change to the Securities and Exchange Commission (SEC).The rule change aims to permit the listing and trading of options for three Ether ETFs managed by Grayscale and Bitwise.
On August 7, NYSE Americanrequested that the SECapprove trade options for the ETHE, ETHW, and Grayscale Ethereum Mini (ETH) ETFs.
NYSE and Nasdaq ETF OptionsAccording to NYSE American, enabling options trading for these Ether ETFs would offer investors a cost-effective means of increasing their exposure to Ether.
Moreover, this change would introduce a valuable hedging mechanism, allowing investors to manage their positions in Ether-related products more effectively. The exchange noted that the proposed options trading would significantly benefit investors by providing an economic tool for managing investment risks.
The proposal is now open for public comments, with 21 days for stakeholders to submit feedback.
This proposal pertains exclusively to the Grayscale and Bitwise Ether funds, the only spot Ether funds currently listed on the NYSE American exchange.
Meanwhile, the move underscores the increasing integration of crypto investments into traditional financial markets. This initiative follows a similar request made by Nasdaq on August 6 to seek SEC approval for options trading on the ETHA ETF.
Notably, the proposals from the exchanges reflect a growing demand for Ether-based financial instruments. However, each request is specific to the funds listed on their platforms.
Although the enthusiasm is apparent, the exchanges may face delays in obtaining approval. The reason is that the SEC's authorization for options trading on spot Bitcoin ETFs is still pending despite accumulating approximately $50 billion in assets since their launch in January.
Moreover, on July 25, the SEC informed several options exchanges that it needed more time to complete their request to list options on spot Bitcoin ETFs. Nasdaq was also part of the exchanges in question.
Options for Investment ProtectionOptions are a financial tool that hedge funds and financial planners use to protect against sudden changes in market prices. For example, when Ether's price dropped by 28% on August 5, options could have reduced the impact of that loss.
Besides protection, options allow for more advanced strategies, like the covered strangle." This strategy is a specific technique that 10x Research believes could potentially increase profits or limit risks.
Financial advisers play a significant role in managing investments within the $9 trillion ETF market, handling nearly half of the money that flows in.
According to a survey by The Journal of Financial Planning, more than 10% of these advisers use options to help manage their clients' investments. This means they use options to make adjustments that can protect or grow their clients' money.
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