The leading derivatives marketplace, Chicago Merchantile Exchange Group, has announced that it would be launching options on Bitcoin futures on its platform in Q1 of 2020, subject to regulatory approval. In a press release, Tim McCourt, CME Group’s 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 further stated that the new products would enable institutional and professional traders to “manage spot market bitcoin exposure as well as hedge Bitcoin futures positions in a regulated exchange environment.” This new product could allow traders “the right, but not the obligation, to buy or sell” Bitcoin futures contract at a fixed price on or before the option’s expires.
Along with this, the derivatives company stated that there have been 20 successful expiration settlements since the launch of its Bitcoin futures market in December 2017. The press release read,
“Year to date, nearly 7,000 CME Bitcoin futures contracts (equivalent to about 35,000 bitcoin) have traded on average each day. At the same time, institutional interest continues to build with the number of large open interest holders reaching a record 56 in July.”
Interestingly, the announcement of adding options to Bitcoin futures market was made days before the launch of Bakkt, the crypto-venture of Intercontinental Exchange. Unlike CME, Bakkt is said to have a significant impact on the Bitcoin market as the daily and monthly Bitcoin futures offered on the platform will be settled in Bitcoin, instead of cash.