The world’s leading derivatives marketplace, CME Group has published specifications for the Bitcoin options which the company will launch early next year. CME Group executive Tim McCourt said there was increasing client demand for the firm’s Bitcoin derivatives and now the company has published specifications for the options products.
The contract unit will consist of one Bitcoin futures contract, which is approximately five Bitcoins. There’s a minimum price fluctuation and the listing cycle will mirror the firm’s Bitcoin futures exposure. CME’s Bitcoin options on futures will be traded between Sunday through Friday on Globex and Clearport. The company notes that the Bitcoin options product is subject to revision and review by financial regulators.
“We’re working to launch options on those futures,” McCourt said to crypto analyst Benjamin Pirus in a recent interview. “The option on the Bitcoin future will give the holder of that option, either a put or a call, the right – but not necessarily the obligation, to either purchase or sell the underlying futures contracts at maturity.” McCourt further stressed that it’s very similar to the way other options in the marketplace work.
In September this year, the CME Group had announced that it would offer options on its Bitcoin futures contracts starting in the first quarter of next year. The CME Group owns large derivatives, options and futures exchanges in Chicago and New York City using its CME Globex trading platforms. It also owns CME Clearing which provides settlement and clearing of exchange trades.
The crypto derivatives markets and products have matured a great deal since they launched and it’s been a touch less than two years since CME launched its BTC-based futures. At the time, the company’s chairman emeritus Leo Melamed told Reuters in an interview that adding BTC futures was a “very important step for Bitcoin’s history.” Melamed added that he believed institutional investors would be very interested in the new asset class. “We will regulate, make Bitcoin not wild, nor wilder. We’ll
tame it into a regular type instrument of trade with rules.”
The CME Group has provided clients with the ability to hedge or trade benchmark options on futures across nearly every asset class. The firm has an average daily volume of $4.3 million this year and aims to offer options on Bitcoin futures so investors can have a variety of different methods to trade the asset. When CME announced the launch of Bitcoin options, McCourt had detailed that the new product will provide clients with additional flexibility to trade and hedge their Bitcoin price risk.