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Cryptocurrency Derivatives Series: CME Embraces Bitcoin Futures Despite Price Tumble, Predicts Crypto-Options Contracts To Lure Investors

The renowned derivatives marketplace ‘CME Group’ has recently made an announcement to unveil options on its Bitcoin futures contracts by Q1 of 2020.

As the total number of daily transactions of the underlying instrument ‘Bitcoin’ has improved, so have the instruments traded in it.

Well, CME Group has the extensive derivatives mechanism through which clients can effectively hedge or speculate via benchmark options on futures across every investable asset class, with average daily volume of 4.3 million in 2019 to date. 

The company is now intending to improvise hedging and trading arrangements for their clients with such a derivatives instrument (Bitcoin options).

The CME Group Global Head of Equity Index and Alternative Investment Products, Mr.Tim McCourt, said that"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." 

As per South China Morning Post reporting, Tim McCourt reckons that the upcoming launch of Bitcoin options contracts most likely become a luring factor among Asian crypto miners and investors. 

The bitcoin options will play pivotal role in mitigating potential risks of counterparty default with a central clearing. Furthermore, such mechanism enhances opportunities for traders and assist them in hedging and devising trading strategies.

CME has recently twitted that despite the Bitcoin price tumble, the customer interest in CME Bitcoin futures remained strong during Q3 with daily OI of over 4.6K contracts, up 61% vs Q3 2018.

By Niranjan Patil
  • Market Data
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