CME Group to Launch Options on Bitcoin Futures in Q1 2020

Published at: Sept. 20, 2019

The Chicago Mercantile Exchange (CME) Group is adding options to its Bitcoin (BTC) futures contracts in the first quarter of 2020, pending regulatory review.

The development was announced in a news release on Sept. 20.

“Flexibility to hedge Bitcoin price risk”

Tim McCourt — CME Group Global Head of Equity Index and Alternative Investment Products — said:

"Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk."

McCourt added that the new products are intended to help institutions and professional traders manage spot market Bitcoin exposure, as well as enable them to hedge Bitcoin futures positions in a regulated exchange environment.

CME Group’s announcement notes that, since the launch of Bitcoin futures on the exchange in December 2017, there have been 20 successful futures expiration settlements, with more than 3,300 individual accounts trading the product.

Year to date, a reported 7,000 CME Bitcoin futures contracts — equivalent to roughly 35,000 BTC — have traded on average each day.

For clients hedging or trading benchmark options on futures across diverse asset classes, CME Group notes that it has seen an average daily volume of 4.3 million in 2019 thus far.

Meanwhile, institutional interest in CME Bitcoin futures peaked in early summer 2019, with a record 56 large open interest holders reported in July.

Institutional momentum gathering pace

This intense uptake has been gradually building all year, with Cointelegraph previously reporting that, in May, CME Bitcoin futures had hit a then all-time high. 

Elsewhere in the institutional Bitcoin futures space, Bakkt Warehouse — the qualified custodian for crypto trading platform Bakkt — began accepting customer Bitcoin deposits and withdrawals earlier this month.

Bakkt intends to launch physically delivered Bitcoin futures, in contrast to the existing cash-settled Bitcoin futures offered by both CME and the Chicago Board Options Exchange.

Tags
Adoption
Bitcoin
Cryptocurrencies
Bitcoin Futures
Futures
Cme
Related Posts
Cryptocurrency: The future of futures?
Many traders entering cryptocurrency markets from traditional finance may look to derivatives as vehicles for price speculation and hedging. There are plenty of choices when it comes to exchanges and instruments; however, traders should consider a few key differences between crypto futures and traditional futures before dipping a toe into this rapidly growing market. Related: 3 things every crypto trader should know about derivatives exchanges Different instruments Traders entering cryptocurrency from the traditional markets will be accustomed to futures contracts with a fixed expiration date. Although fixed expiration contracts can be found in cryptocurrency markets, a significant proportion of crypto …
Technology / June 26, 2021
CME Group introduces micro Bitcoin futures
The Chicago Mercantile Exchange, or CME, has officially launched its newest Bitcoin (BTC) derivatives product, setting the stage for wider mainstream adoption of digital assets. TIm McCourt, CME Group’s global head of equity index and alternative investment products, said the new product will provide “an efficient, cost-effective way for a broad array of market participants — from institutions to sophisticated, active traders — to fine-tune their bitcoin exposure and enhance their trading strategies.” The Micro Bitcoin futures contract is worth 0.1 BTC, which provides traders with an additional tool to hedge their digital currency price risk. J. B. Mackenzie, managing …
Bitcoin / May 3, 2021
US Bitcoin Derivatives Market, Highlights of 2019
The United States Bitcoin (BTC) derivatives market witnessed a slew of developments in 2019 as “old players” set trading volume records and “new players” introduced novel market products. After months of regulatory maneuvering, Bakkt finally launched and has gone on to post record Bitcoin futures trading volumes. Several platforms have also obtained Swap Execution Facility licenses from the U.S. Commodity Futures Trading Commission as the crypto derivatives arena in the country expanded throughout 2019. One of the 19 CFTC-licensed platforms, Tassat, said the approval is a preliminary step to the company listing physically settled Bitcoin derivatives for institutional clients. Overall, …
Bitcoin / Dec. 27, 2019
May to Become Strongest Month for CME’s Bitcoin Futures Trading: Report
CME Group, the second global exchange to list bitcoin (BTC) futures, is about to record the biggest trading month for BTC futures trading, industry news outlet The Block reports May 21. The publication has reportedly cited data from an external email from CME. The Chicago Mercantile Exchange purportedly revealed that the average daily bitcoin futures trading volume hit a new high of 14,000 contracts solely in May 2019. To date, May 13 has reportedly become the biggest trading day for CME’s bitcoin futures, with the platform having registered 33,700 contracts worth $1.35 billion in bitcoin at the time. The exchange …
Adoption / May 22, 2019
5 ways derivatives could change the cryptocurrency sector in 2022
We‘ve all heard stories of billion-dollar future contracts liquidations being the cause of 25% intraday price crashes in Bitcoin (BTC) and Ether (ETH) but the truth is, the industry has been plagued by 100x leverage instruments since BitMEX launched its perpetual futures contract in May 2016. The derivatives industry goes far beyond these retail-driven instruments, as institutional clients, mutual funds, market makers and professional traders can benefit from using the instrument‘s hedging capabilities. In April 2020, Renaissance Technologies, a $130 billion hedge fund, received the green light to invest in Bitcoin futures markets using instruments listed at the CME. These …
Adoption / Dec. 30, 2021