CME Bitcoin Options Contract Details Are Revealed

The Chicago Merchantile Exchange Group (CME) reveals the specifications of the Bitcoin Options Contract as it awaits regulatory approval.

31 October 2019, AtoZMarkets – Last month, CME unveiled its plans to roll out Bitcoin option contracts on existing Bitcoin Futures contracts. The CME has now published the specifications for the same. Throughout an announcement on its official website, the CME revealed that the options on its Bitcoin Futures contracts would most likely come into effect in early 2020. However, the Chicago based Exchange has added a warning. By stating that it had not yet received regulatory approval for options contracts.

Bitcoin Futures Contract

The CME's FAQ page explained how options on Bitcoin Futures contracts work. According to the same principle, shortly after the end of trading, the option contract would end up in a single Bitcoin futures contract. A Bitcoin Futures contract is equal to five Bitcoins, and the price per Bitcoin would be quoted in USD. Users can purchase the latest products on CME Globex and CME Clearport via ex-pit transactions.

Users can start trading from 17:00 on Sundays until 16:00 on Fridays. The last Friday of the due month would be considered the last trading day. Also, on the day the contract expires, the final settlement value of the option contract would be determined based on the CME CF Bitcoin Reference Rate (BRR) at 4:00 pm London time. Besides, the option contract would be part of the equity index and alternative products.

Tim McCourt, global head of Equity indices and alternative products at CME, revealed in an interview that the latest development is the result of customer feedback. He also said that the Chicago-based Exchange took validation from market participants during product design.
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He said that where they are in the process, they have done extensive validation with members, and after that announcement, they will continue to work with market participants who have comments on how the product should be designed. And they will continue to ensure that it meets market participants’ needs.

The latest initiative of the Chicago based Exchange comes one week after Bakkt's announcement on the subject. The cryptocurrency platform has garnered immense attention by launching Bitcoin Futures contracts. Bakkt's Bitcoin Options contracts will go into service on 9 December 2019, and Bakkt claims to be the industry's first.

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