Well, it's almost always a tradeoff between time spent and PnL received. On something illiquid and volatile, it would be hard to scale it to the point when it makes enough money to compensate for the time. The options will likely be on futures or on the index (which will be on de-facto futures, like vix options).
Well, of course. But you're still hedging in $16k internments (this week) for the short puts. Very different than hedging the calls directly with fractional BTC.
If Bitcoin options were available, I would have two concerns: 1) Can IV be greater than 100%? 2) How would Bitcoin affect the VIX? Would the extreme volatility of Bitcoin (and by extension the options) affect the calculation of VIX enough to render it a useless metric?
The VIX is a measure of S&P 500 implied volatility, and Bitcoin is not in the S&P, so I don't understand your 2nd question.
FYI. I spoke to the CFE. In addition to other questions, I asked about options. They told me that they do plan to add options on the future, not an index on the CBOE. The option will trade on the CFE and settle with the future. No date yet.