By
Bena Ilyas
May 14th, 2024
CME Group is to launch options on BTC futures in response to the growing interest in cryptos and customer demand for tools to manage Bitcoin exposure.
The United States Commodity Futures Trading Commission (CFTC) has previously allowed several crypto derivatives products to enter the market. In that context, CME Group, which offers Bitcoin futures, plans to launch options on BTC futures on January 13, 2020.
While responding to the growing interest in cryptos and customer demand for tools to manage Bitcoin exposure, CME Group decided to launch options on BTC futures. As we highlighted earlier, the firm officially confirmed this launch last November.
All About Options
CME Group has published a course on their site to teach all interested entities about the options services that they plan to offer. Their curriculum offers an overview of what investors must know to trade options. The course, dubbed ‘All About Options,’ is a compilation of various individual options courses from the CME Institute.
CME Group integrated this course to offer the learners with the most educational journey in a path that will walk them through all the vital information in an easy-to-understand format. The curriculum caters to all types of traders. It covers hypothetical market scenarios to determine how input changes, commonly used trading strategies, and the basics of options trading affect the premium.
The introduction package has up to 15 lessons that introduce traders to the world of trading options. Other important courses of this curriculum include Options Strategies, Options Greeks, and Long Options that include Underlying and Volatility Impact. CME Group also teaches Options on Futures for Equity Traders and Tools for Options Analysis.
Benefits of Trading Bitcoin Futures Options
CME Group’s upcoming Bitcoin Futures Options service will come with various benefits to the traders. According to official reports, it will offer value based on the regulated, large CME CF Bitcoin Reference Rate (BRR). The BRR calculations will incorporate and analyze trade flow from major bitcoin exchanges and various trading platforms daily.
The Options are designed to settle into actively traded CME Bitcoin futures (BTC). The traders who invest in the new BTC Options can save significantly on margins through margin offsets. Thus, traders enjoy greater capital efficiency. It reduces counterparty default risk through CME central clearing.
The options on futures will also expand traders’ choices for risk management and building strategies and help them achieve various investment outcomes.
Contract Specifications
1 Bitcoin Futures contract will represent 5 Bitcoins and the price quotation will appear in U.S. dollars per Bitcoin. The minimum price fluctuation stands at 5 index points ($25.00) with a listing cycle comprising of six consecutive monthly contracts. These contracts will include the nearest two December contracts.
A block minimum will have 5 contracts. Notably, the last day of trading is the last Friday of every contract month. All trading in expiring futures is set to terminate at 4:00 p.m. London time on all the last days of trading. The settlement at expiration and strike intervals are explained in the terms and conditions of these contracts.