CME Group announces ETH options ahead of Ethereum's Merge

Derivatives marketplace Chicago Mercantile Exchange (CME) Group announced plans to offer options contracts for Ether (ETH) on its platform on Monday. The announcement was made ahead of Ethereum's Merge, which which will take place on Wednesday.

CME Group global head of equity and FX products Tim McCourt said the move was “well timed.”

“As market participants anticipate the upcoming Ethereum Merge, a potentially game-changing update of one of the largest cryptocurrency networks, interest in Ether derivatives is surging,” McCourt said.

CME said the options would price Ether futures at 50 ETH per contract. This pricing point is based on the ETH reference rate against the U.S. dollar, which will be updated daily.

By offering ETH options, the marketplace enables traders to have more flexibility in the derivatives market. Unlike futures contracts that enforce transactions of assets at a certain time, holders are not required to purchase or sell their assets at a specific date.

CME Group already has several derivative products on its platform. It launched its first Bitcoin (BTC) futures contracts in December 2017. Then in January 2020, the company began to offer BTC options trading. The company then added micro Ether futures contracts to its product list in December last year.

Earlier in March, CME Group introduced options contracts for micro BTC and ETH futures, priced at 10 percent of their tokens. Consumers can also obtain BTC and ETH futures, which are priced based on reference rates against the euro.

Despite the bear markets that affected various parts of the crypto industry, CME Group’s Bitcoin (BTC) and ETH derivatives contracts recorded all-time high transactions in Q2 of 2022. McCourt said the marketplace’s ETH futures had “seen a 43% increase in average daily volume” yearly. In this year’s Q2, the daily trading volume for ETH futures reached 6,100 contracts.

“The variety of products, including the smaller sized micro bitcoin and micro ether futures and options, offers enhanced flexibility and trading precision for a range of market participants, including large institutions as well as sophisticated, active traders,” McCourt explained.

Ethereum's Merge

Ethereum’s next upgrade, “The Merge," is expected to complete on September 14. This update will change the network's old proof-of-work consensus mechanism to proof-of-stake. The developers of Ethereum confirmed that the preparation for this update had been completed, with the transition in Mainnet-Shadowfork-13 being done successfully.

This upgrade will help the blockchain to operate more efficiently. According to several analysts, the energy efficiency will increase to 99.95 percent. However, they also noted that the upgrade would sacrifice some of the security components that Ethereum has.

The announcement of the Merge initially raised the token’s price, allowing it to outpace BTC. However, as the upgrade phase got closer, the token saw a 3.23 percent decrease on Monday, trading at $1,715 per unit. Compared to last month, ETH recorded an 11.14 percent of value decrease.

The outcome of the upgrade will further determine the ETH market value in the future. Additionally, the U.S. Consumer Price Index (CPI) for August, which is scheduled to be released on September 15, may contribute to price instability, given that the Federal Reserve plans to tighten financial regulation.