CME Group, one of the largest derivatives exchange announced it will launch options on its Bitcoin futures contracts in Q1 2020. The proposal is pending regulatory review. By launching Bitcoin options, the company is providing its clients additional tools for precision hedging and trading.

“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,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.

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

Demand for Bitcoin Futures contract

In August 2019, CME exchange had the average Bitcoin futures daily volume of $234,385,300. Recently, Bitwise in their presentation to SEC commission staff, the firm highlights that the Bitcoin futures average daily volume in CME is significantly large in comparison to the average daily volume of the ten largest Bitcoin spot exchanges.

Average daily Bitcoin Futures volumes in CME Exchange. Source: Bitwise latest research report.

Since its inception, 3300 individual accounts have traded Bitcoin futures in the CME Exchange.

Since their launch in December 2017, a total of 20 futures expiration has been successfully settled. On an average, each day nearly 7,000 Bitcoin futures contracts (equivalent to about 35,000 bitcoin) have traded in the exchange. More than 3,300 individual accounts have traded the Bitcoin futures product since its launch.

In the Bitcoin futures space, last month Bakkt received clearance from regulators to launch Bitcoin Futures. The contracts will be physically-delivered to clients in Bakkt Warehouse, in contrast to the cash-settled Bitcoin futures offered by CME.

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