CME to Launch Bitcoin Options Next Year

CME Group today confirmed the launch date of options on its Bitcoin futures contracts, January 13, 2020.

November 12, 2019, | AtoZ Markets – Popular derivatives exchange CME Group has revealed it’s looking to launch options on its Bitcoin futures products in January 2020, as long as it gets approval from regulators.

Options on futures contracts give the purchaser the right to buy or sell a specific futures contract at a predetermined price at the option’s expiration date.

CME to debut Bitcoin options on January 13

The CME had earlier this year noted that subject to regulatory approval, it will launch BTC options in 2020. Now, the group has announced that it’s looking to see options go live on January 13.

In a notice published on its website, Tm McCourt, the trading platform’s global head of equity index and alternative investments products, said that since the launch of bitcoin futures in late 2017 its clients have been expressing “growing interest in options as another way to hedge and trade in these markets.” He added:

We have worked closely with clients and the industry to establish a robust and increasingly liquid underlying futures market here at CME Group, and we believe Bitcoin options will now offer our customers greater precision and flexibility to manage their risk.

Specifications of BTC options revealed

Chicago-based CME has offered more insights about its upcoming crypto derivatives two weeks ago. They also revealed that each options contract will be based on one Bitcoin futures contract, which itself is comprised of five Bitcoin.

Furthermore, the BTC options will be priced off of the CME Bitcoin Reference Rate. This is an index that references pricing data from several cryptocurrency exchanges. The exchanges include Bitstamp, Coinbase, itBit, Kraken, and Gemini. The BTC options will be quoted in U.S. dollars per Bitcoin with a tick size of $25.

The exchange has also doubled down on investors’ growing interest in Bitcoin futures. According to CME, its average daily volume so far this year was of 6,500 contracts. This means it traded on average the equivalent of 32,500 BTC ($282 million) a day. It has over 3,500 individual accounts registered to trade the product, with nearly half being outside the United States.

Moreover, International Continental Exchange-backed Bakkt announced in October that it was launching a competing options product on Dec. 9.

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