Options on BITO began trading on Wednesday, the day after its launch. Of the $558m in notional options value traded so far, 66% has been in calls, leading to a net dollar delta traded of $101m.

Several new investors are trying to get their head around the new Bitcoin ETF that is futures based. BITO is the ticker symbol and it has been barely traded for just a few days. But they already have options on it, which is very, very fast.  Usually it takes about a week or 48 hours. They have options on it.

The news about the BITO pointed to how it probably had some type of drag because it is futures based.  This is based on buying the futures contract.  The futures is regulated by a different regulator. Commodities futures trading commission regulates the futures market.

The SEC regulates the stock market. So, bitcoin and cryptocurrencies are not considered a security yet, but once it does, it is going to be regulated differently. BITSO technically, is a security, but it is a futures type of security. So, once again it is regulated by a different regulatory body.  So, the only way you can come out in the US was with an ETF, which had to be in the futures space.

They are not actually buying cryptocurrencies.  They are not going on to something like Coinbase or whatever the case may be and buying the actual Bitcoin or Ethereum.  They are buying and selling the futures contract. This is the Bitcoin Futures Contract.

When it is going to have some type of drag either up or down because the futures contract has a cost to carry, because it is not huge and it is not going to be as exact as Bitcoin whether it goes up or down.

Bitcoin is up 10% for the year, then that does not mean that this ETF is going to be 10% it will be up but not necessarily 10%. It works a lot similar to an oil contract.  For instance, if the Oil price is going up steadily over the past few months, then the ETF contract will also be going up, but the up and down of the ETF will not be the same percentage wise.  However, it is a good thing to use and it is possible to speculate on the BITO. And, you can use the BITO as a hedge and it can be used to speculate on different positions. There are options on BITO and investors play in it when it goes up and down.