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CME Group to Launch Options on Bitcoin Futures Contracts in Two Months

CME Group to Launch Options on Bitcoin Futures Contracts in Two Months 101
Source: iStock/John M. Chase

2020 might kick off with a launch of a new financial instrument for Bitcoin (BTC) investors.

After the September announcement of its plans to launch this new addition to their offerings for Q1 of 2020, the Chicago Mercantile Exchange (CME Group), a major financial derivatives marketplace, said today that the options on its Bitcoin futures contracts will be available for trading starting January 13th next year, provided that the regulators give it a green light.

Tim McCourt, the Global Head of Equity Index and Alternative Investment Products, said that, since the launch of the Bitcoin futures almost two years ago, the exchange has seen “a growing interest” in options from their clients, who view it as “another way to hedge and trade in these markets.” McCourt added that CME Group worked closely with their clients and the industry in order “to establish a robust and increasingly liquid underlying futures market […], and we believe Bitcoin options will now offer our customers greater precision and flexibility to manage their risk."

As for specific details, among other specifications, the website states that:

  • the value is based on the regulated CME CF Bitcoin Reference Rate (BRR), calculated daily by aggregating BTC trading activity across five major cryptocurrency spot exchanges between 3:00 p.m. and 4:00 p.m. London time;
  • CME options on bitcoin futures settle into 1 bitcoin futures contract upon termination of trading;
  • tick size is 5 index points or USD 25.00, with reduced tick size being 1 index point or USD 5.00;
  • trading hours are 5:00 p.m. to 4:00 p.m. CT, Sunday through Friday.

The announcement also provided a look into the performance of the exchange’s bitcoin futures contracts so far, stating that:

  • CME has seen average daily volume of more than 6,500 contracts in 2019, which is equivalent to some BTC 32,500;
  • it has seen 22 successful futures expiration settlements since launch;
  • there are more than 3,500 individual accounts registered for trading;
  • 47% of trading volume comes from outside the U.S.

As previously reported, CME Group said that it plans to double its monthly Bitcoin futures trading cap to BTC 10,000 and that it already asked for regulatory permission from the U.S. Commodity Futures Trading Commission.

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