Derivatives provider CME Group has announced that it will be making available Bitcoin options in Q1 of 2020.
CME revealed on Friday that they decided to offer bitcoin options as they want to provide users with “additional tools for precision hedging and trading.” The launch is pending regulatory review. Regulators have not yet given their approval on the new investment product.
The top derivatives platform also cited that the decision was determined by an increasing call for trading investment that would manage the risks of Bitcoin exposure.
“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,” – said Tim McCourt, CME Group global head of equity index and alternative investment products.
The stated that since 2017 it has conducted 20 “successful” futures expiration settlements, with more than 3,300 individual accounts trading the contracts. The company also disclosed that around 7,000 CME bitcoin futures contracts are being traded on a daily basis.
In December 2017, the company rolled out its first crypto futures product, around the same time that another derivative marketplace, the Chicago Board Options Exchange (CBOE), launched its own futures contracts.
But after Cboe decided to drop offering bitcoin futures in March 2018, CME remained the only regulated Bitcoin futures market to provide this service in the U.S. According to U.Today, all of CME’s Bitcoin futures contracts saw an increase of 132 percent since 2018.
But CME will have a new competitor starting with Monday, as the Intercontinental Exchange and its subsidiary Bakkt will start launching a new crypto futures contract. The difference is that while CME offers cash contracts, ICE will have physically settled products, meaning buyers will get actual bitcoin instead of its corresponding value in fiat.
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