Bakkt Announces First Regulated Options Contract for Bitcoin

Bakkt announced on Oct. 24 that it will be launching the first regulated options contract for Bitcoin (BTC) futures on Dec. 9.

Bakkt options contract is certified with CFTC

According to the Bitcoin futures exchange, the key features of the Bakkt Bitcoin Options contract include capital efficiency, cash or physical settlement, European-style options, low fees, as well as instant messaging, block trades and options analytics.

A European-style option is an option contract that limits the opportunity for early execution and reduces operational burdens, the firm noted.

The new options product is based on customer feedback, explains CEO Kelly Loeffler and is designed to hedge or gain bitcoin exposure. 

Bakkt adds:

“ICE Futures U.S. has self-certified the contract with the CFTC and we’re excited to leverage the benchmark futures prices and institutional-grade custody to meet the needs for a regulated options contract.”

$1.25 fee per option contract starting in 2020

As Bakkt CEO Kelly Loeffler noted in the announcement, the Bakkt Bitcoin Options contract will be based on Bakkt Monthly Bitcoin Futures contract, a major type of Bitcoin futures contract launched alongside Bakkt Daily Bitcoin Futures on Sept. 22.

Specifically, Bakkt will be charging $1.25 per options contract starting in January 2020 after debuting the options with the fee waiver in December, Loeffler said.

The news comes just a day after Bitcoin futures volumes on Bakkt hit a new all-time high of 452 BTC futures contracts. Also on Oct. 23, Bitcoin price abruptly crashed $500 in just five minutes after trading at around the $8,000 threshold over the past week.

In early October, the Intercontinental Exchange (ICE), the governing body behind the New York Stock Exchange, executed the first block trade of Bakkt Bitcoin futures contracts. In the recent announcement, Loeffler noted that the Bakkt Bitcoin Options contract will feature block trades by using ICE Block.