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CME to Launch Futures Option on Bitcoin in Early 2020

Bitcoin Options is intended to provide customers with "additional tools for precise hedging and trading"

The Chicago Mercantile Exchange (CME) group announced on Friday that it will going to offer options on its bitcoin futures contracts starting in the first quarter of next year. CME first launched its futures product in December 2017. CME said that the launch of bitcoin options is intended to provide customers with "additional tools for precise hedging and trading". The launch is under regulatory review.

What are Future Options ?

A futures option, or option on futures, is an option contract in which the underlying is a single futures contract. The buyer of a futures option contract has the right (but not the obligation) to assume a particular futures position at a specified price (the strike price) any time before the option expires.

CME Group equity index and global head of alternative investment products Tim McCourt said:

“Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk. These new products are designed to help institutions and professional traders to manage spot market bitcoin exposure, as well as hedge Bitcoin futures positions in a regulated exchange environment.”

CME also said that since the 2017 launch, it has seen 20 “successful” futures expiration settlements, with over 3,300 individual accounts trading the contracts and on an average 7,000 CME bitcoin futures contracts are traded each day.

In 2017, when both CME and CBOE announced the launch of bitcoin future contract. At that time the price of bitcoin reached its new all time high. It will be interesting to see, what will going to happen this time with this news of options addition to Bitcoin derivative market by CME.


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