CME Group Launches Highly Anticipated Bitcoin Futures Options

The Chicago Mercantile Exchange (CME) – the world’s largest futures exchange – has announced the launch of its new Bitcoin (BTC) futures options.

After having been granted the necessary regulatory approval, the new BTC futures options is as of January 13 live on the company’s official website. The news follows the company’s initial plans , which were first announced in November 2019. Accordingly, the new product came to be in response to the growing interest in digital assets as well as customer demand for tools to manage BTC exposure.

The new BTC futures options will be added to the exchange’s repertoire and hopefully appease the growing interest of the investors on the platform. Due to the increased demand, CME had also filed to double its monthly BTC futures open positions limit to 10,000 BTC in September of last year.

In the meantime, the new product will allow traders to use alternate strategies as well as allowing them to save on margins by using margin offsets. The options will have a tick size of $5 per BTC and therefore, given that the contracts are 5 BTC, the options will move in increments of $25.

Furthermore, CME said that the fees for options on BTC futures will match the BTC futures according to the CME Fee Schedule. In addition to that, the firm plans to introduce a market maker program to support the on-screen market development of BTC futures options.

Tim McCourt, global head of equity index and alternative investment products at CME Group, stated that options had been a product that’s been in high demand from customers ever since they launched futures back in December 2017.

Upon the announcement of the new product, McCourt expressed excitement at having brought this new risk management tool to the market. He further explained that a lot of companies who use futures contracts, look to use strategies unique to option trading.

“It allows people to precisely manage the price risk associated with Bitcoin. You can deploy overriding strategies by selling calls, you can buy downside protection. These are things you can’t necessarily do with a linear one delta future,” said McCourt.

He further noted that lots of people are looking to deploy similar benefits and use cases for Bitcoin that they’re doing for other asset classes.

Meanwhile, the announcement comes amidst BTC futures traders reportedly generating at least $20 billion in daily volume last week. According to data from analyst Skew Markets, global futures trading volume alone exceeded $20 billion on January 8th.

CME is the third global derivatives exchange to launch trading for options on Bitcoin futures. Digital assest platform Bakkt – backed by the Intercontinental Exchange (ICE) – was the first exchange to launch Bitcoin options in the United States. Bakkt was then followed by cryptocurrency derivatives exchange FTX that quietly launched Bitcoin options trading on January 11.