CME Group will launch bitcoin futures in the fourth quarter.

Bitcoin will trade in $25 ticks and have a daily range of no more than 20% above or below the prior settlement price.

CME Group, one of the largest exchange groups in the world, announced last week it will roll out a bitcoin futures contract in the fourth quarter.

The announcement has generated a lot of buzz on Wall Street, and sparked a big rally in the cryptocurrency. Bitcoin climbed from $6,100 on October 30 (the day before the announcement) to more than $7,000 on November 7.

Futures, which allow two parties to exchange an asset at a specified price at an agreed upon date in the future, have been around since the late 19th century. In some cases, when a futures contract settles the buyer of the contract can receive their payment in the product itself (a barrel of oil, say), or in cash. The latter are referred to as cash settled futures. CME's bitcoin futures will settle in cash. (You can read a full explainer on bitcoin futures here.)

As futures get ready for trading, CME this week sent out a note setting out how the bitcoin futures will work. Here's what you need to know: