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The US futures exchange will offer retail-friendly, cash-settled tools for managing risk tied to Bitcoin’s volatility.
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The Chicago Mercantile Exchange (CME) Group, a US futures exchange, is preparing to list options tied to its bite-sized Bitcoin Friday futures amid mounting interest in cryptocurrency derivatives among retail investors, according to a Jan. 29 announcement by CME.
The options, which will settle in cash rather than spot Bitcoin (BTC), will start trading on Feb. 24, pending regulatory approval, the CME said. They will complement the CME’s existing suite of physically settled options on BTC and Ether (ETH) futures, it said.
“[T]hese new options […] provide traders with even greater precision to manage short-term bitcoin price risk,” Giovanni Vicioso, CME’s global head of cryptocurrency products, said in a statement.
“[T]he smaller size of these contracts, along with daily expiries, offer market participants a capital-efficient toolset to effectively adjust their bitcoin exposure,” he said.
Launched in September, Bitcoin Friday futures are sized at only one-50th of 1 BTC. That is substantially smaller than rival retail-oriented Bitcoin futures products, such as Coinbase’s “nano” Bitcoin futures, sold in increments of one-100th of 1 BTC.
According to the CME, more than 775,000 contracts have traded since launch on Sept. 29, for an average daily volume of 9,700 contracts.
Bitcoin Friday futures are popular among retail traders. Source: CME
Related: Digital Currency Group spins out new crypto mining subsidiary
Bitcoin options proliferate in the US
The Bitcoin Friday futures options add to an expanding array of options tied to cryptocurrencies in the US.
In September, the US Securities and Exchange Commission greenlighted Nasdaq’s electronic securities exchange to list options on iShares Bitcoin Trust ETF (IBIT). It was the first time the agency approved options on spot BTC ETFs for US trading.
The SEC granted similar authorizations to two more exchanges, the New York Stock Exchange and the Cboe Global Markets, in October.
Options are contracts granting the right to buy or sell — “call” or “put” in trader parlance — an underlying asset at a certain price. In the US, if one party fails to uphold the agreement, the Office of the Comptroller of the Currency intervenes and settles the trade.
Investment managers expect options on BTC to accelerate institutional adoption and potentially unlock “extraordinary upside” for BTC holders.
Related: MARA’s ‘Trump 47’ block highlights anticipation for pro-Bitcoin president
This article first appeared at Cointelegraph.com News
