FxWirePro: Options for Crypto-options trading

Cryptocurrency derivatives have been the talk of the town in the recent past, though there has been a mixed bag of performance. Cryptocurrency derivatives, including cryptocurrency futures, cryptocurrency CFDs, and cryptocurrency options) have been under the meticulous scanner of the renowned global regulators, such as US SEC, CFTC and UK’s Financial Conduct Authority (FCA).

While Crypto protagonists have been fascinated ever since the launch of bitcoin futures and options back in late 2017. Bitcoin options have been an admirer to be the beneficiary of a volatile market by strategically hedging some of the risks as many of them are unversed with the intricacies of newly invented crypto-avenue.  

We all know that there is duality in the options to mitigate the volatility risks in this cryptocurrencies, namely, ‘call’ and a ‘put’ option in the conventional financial markets.

Please be noted that the options have been instrumental in conventional financial markets as well as popularly utilized as a speculative instrument. 

Well, quite a few veterans have elucidated as to how the crypto avenue is no exception from this risk mitigating mechanism. Nevertheless, it is observed that the demand for crypto-options is not very high, this is because, the rapid dip in the trading volumes of the underlying asset (for example, Bitcoin, ethereum etc). 

Optionality for these assets renders the similar financial arrangements, i.e. contracts that enables holders of the crypto-options rights to buy or sell a cryptocurrency at a predetermined price and with a predetermined date.

It is very prudent to know that the Crypto Options traders, as to how the cryptocurrency options are styled, whether they are physically-settled and cash-settled contracts. 

The reputed crypto-exchanges, like, ‘Bitmex, Okex, and Okcoin’ offers bitcoin-settled contracts. The previously introduced CME BTC futures contracts are the most prevalent cash-settled derivatives mechanism, while the CBOE has been an alternative option. 

Elsewhere, ‘vanilla’ options are also going to be another popular alternative, which is most likely to be launched by ‘Deribit’ as there has news that they offer services with economical charges.

Overall, with a deal of optimism, crypto-aspirants seem to be buoyant about the growing cryptocurrency market capitalization, correspondingly, one could foresee the reasonable rise in the number of derivatives, such as futures, options but ETFs are still dubious.

Currency Strength Index: FxWirePro's hourly BTC is at 123 (bullish), while USD is inching at -62 (which is bearish), at press time 12:24 GMT. 

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