Hashdex Launches Options on NCIQ ETF, Expanding Risk-Management Tools for Institutional Investors

Options trading has been introduced for Hashdex’s diversified crypto exchange-traded fund (ETF), in a move seen as expanding tools for institutional investors to curb downside risk or seek additional returns.

According to crypto-focused media outlet CoinDesk on the 31st, options on Hashdex’s “Nasdaq CME Crypto Index ETF (NCIQ)” began trading on Nasdaq. The ETF is designed to diversify across multiple digital assets, including not only Bitcoin and Ethereum but also XRP, Solana, ADA, Chainlink, and Stellar.

With the launch of these options, investors can hedge against price declines without selling the underlying ETF, or generate additional income by collecting option premiums. Options refer to the right to buy or sell an asset at a predetermined price, and are broadly divided into call options that bet on upside and put options that protect against downside.

Until now, institutional investors could use options to manage risk in single-asset products such as Bitcoin ETFs, but it was difficult to deploy similar strategies in ETFs that invest across multiple assets. As a result, some institutions reportedly refrained from scaling up allocations, citing a lack of risk-management tools.

Hashdex said, “Some institutions cannot invest in assets without hedging instruments, and they also require a structure that can generate incremental returns on holdings,” adding, “An investment structure that allows investors to preset the extent of potential losses is needed.”