For over a year, trading HashDex’s diverse crypto ETFs has been like riding an amusement park without a seatbelt. Investors could speculate but had little protection if the market fell. That has changed now.
Options for the Hashdex Nasdaq CME Crypto Index ETF (NCIQ) went live on the Nasdaq on Monday, giving investors, for the first time, a way to hedge, generate income, and manage risk in a product that offers diversified crypto exposure, not just Bitcoin and Ether (ETH).
Debuting in February 2025, NCIQ provides exposure to a broad basket of market-cap-weighted digital assets based on the Nasdaq CME Crypto Index (NCI). As of Monday, Bitcoin, Ether, $XRP ($XRP), Solana (SOL), , Chainlink, Stellar (XLM), USD and other assets. The fund has nearly $100 million in assets under management.
Why is starting options important?
Until now, financial institutions could buy single-asset ETFs, such as BlackRock’s Bitcoin and Ether ETFs, and hedge their risks using options tied to those funds. If you want broad exposure across multiple tokens, you can do so via HashDex ETFs, but there is no safety net.
The advisor could not develop a strategy to earn additional income from the ETF or protect against large losses without actually selling the investment. These types of risk management tools are standard for institutions and are often a prerequisite for making large investments.
“Some financial institutions cannot take positions that they cannot hedge,” Hashdex said in an official statement. “Some advisor models require the ability to generate yield from holdings. Some risk management frameworks require a defined outcome structure before approving an allocation.”
Options allow financial institutions to hedge without liquidating their underlying ETF positions, set up yield-generating strategies and other bets that profit from volatility and time as well as price direction, and enter positions with clear maximum losses that meet risk committees and compliance frameworks.
The impact goes beyond these usual strategies, according to Hasdex, and lays the groundwork for more sophisticated TradFi-like structured products, such as principal-protected cryptocurrencies and performance-based ETFs, which guarantee a lower bound on the downside while capping the upside.
A booming options industry
Options are derivative contracts that give you the right to buy or sell an underlying asset, such as a stock or crypto token, at a preset price at a later date. A call option gives you the right to buy and represents a bullish bet on the market. Put options provide protection against falling prices.
The crypto options market has experienced explosive growth over the past five years, with Bitcoin and Ether contracts listed on Deribit recording hundreds of millions of dollars worth of daily trading volume and billions of dollars worth of quarterly expiration trades, which can sometimes move spot prices.
The ETF options market is catching up quickly. Options related to BlackRock’s Bitcoin ETF (IBIT) are currently trading in volume approaching Deribit’s Bitcoin options.
