CME Group publishes specifications for bitcoin options

In mid-September, the foreign exchange company CME Group announced the launch of options on its bitcoin futures in the first quarter of 2020, pending a regulatory review. Tim McCourt, CME Group executive, said customer demand for the company's bitcoin derivatives was "growing." The company has now published specifications for option products.

Read also: The French Ministry of Education publishes a Bitcoin resource guide for educators

Bitcoin options from the CME group

The global markets company, CME Group, offers clients the ability to hedge or exchange benchmark futures on futures contracts for almost any asset class. The company generates an average daily volume of $ 4.3 million this year and aims to offer options on standard bitcoin futures so that investors can use various methods to trade assets. When CME announced the launch of the bitcoin options, McCourt said the new product will offer "customers greater flexibility to trade and hedge their bitcoin price risk." This week, as a result of Bakkt's recent volume increases, CME has released preliminary contract specifications for options. . The price values ​​will be based on the reference rate of bitcoin CME CF (BRR), which is determined by various major cryptographic exchanges.

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The volume of CME Bitcoin futures and interest contracts on 10/28/19.

The contract unit will consist of a bitcoin futures contract, which corresponds to approximately five BTC (USD). There is a minimum price fluctuation and the listing cycle will reflect the company's exposure to term bitcoins. CME's bitcoin options on futures will be traded between Sunday and Friday on Globex and Clearport. The company notes that the BTC options product is subject to review and revision by financial regulators. "We are working to launch options on these futures," McCourt told cryptography analyst Benjamin Pirus in a statement. recent interview. "The option on the future bitcoin will give the holder of this option, either a put or a call, the right – but not necessarily the obligation – to buy or sell the underlying futures at maturity" McCourt added:

It's very similar to how other market options work. The difference here is that the underlying, or the deliverable, of the options contract is a future bitcoin of the CME group.

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CME Group Bitcoin Futures Volume at 11 am EST 11/2/19

Is Bitcoin "tamed" as a traditional investment?

Bakkt's physically delivered bitcoin futures product has been pouring in a lot of ink since the exchange broke new records and general manager Kelly Loeffler announced that Bakkt will also offer options on bitcoin futures. Despite unprecedented highs in the Bakkt warehouse, BTC derivatives of the CME group recorded much higher volumes. Globex of CME recorded 7,242 bitcoin futures on October 28 and 3,284 on open interest. The following days, on Globex until November 1, the contracts were between 2,200 and 3,687. The WEC's November bitcoin futures contracts total 2,641 contracts and the December positions also begin. to multiply.

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Cryptographic markets and derivatives have evolved significantly since their launch, and it has been a little less than two years since CME launched its BTC-based futures. In an interview with Reuters, emeritus chairman of the company, Leo Melamed, had said that adding futures on the BTC was "a very important step for the Bitcoin story." Melamed added that he thought institutional investors would be very interested in the new class of assets. "We will regulate, make Bitcoin not wild, nor wilder. We will tame it into a usual type of trading instrument with rules. Since then, many companies have been offering bitcoin derivatives and futures are also coming into other crypto currencies such as ETH and BCH. The reports state that BCH's futures contracts are expected to start on a regulated market by the CFTC in the first quarter of 2020.

What do you think of the CME Bitcoin Option Specification? What do you think of the global growth of encrypted derivatives? Tell us what you think about this topic in the comments section below.

Image credits: Shutterstock, CME Group, Globex Bitcoin Futures and Pixabay.

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Tags in this story

Bakkt, Bitcoin Bitcoin Futures, BCH, Bitcoin, Bitcoin Money, Bitcoin Options, Bitcoin Reference Rate, BTC, CME Group, CME Group Open Interest, CME Group Volume, Equities, ETH, Ethereum, Finance, Foreign Exchange Market, Market Futures, Kelly Loeffler, Leo Melamed, physically delivered Bitcoin futures, Tim McCourt

Jamie Redman

Jamie Redman is a financial journalist who lives in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about bitcoin, open source code and decentralized applications. Redman has written thousands of articles for about the disruptive protocols that are emerging today.

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