CME’s Bitcoin options launched, the first day’s trading volume surpassed Bakkt
The CME Chicago exchange has officially launched Bitcoin options trading. According to CME, this new type of Bitcoin derivative contract – CME’s Bitcoin futures options – is currently in operation, in line with the company’s plan announced in November 2019.
Now Available: Options on Bitcoin futures offer greater capital efficiencies and a new way to manage bitcoin exposure. https://t.co/7yszlfCSHE pic.twitter.com/VTzIo44456
— CMEGroup (@CMEGroup) January 13, 2020
CME’s Bitcoin options contract has been approved
Options trading on Bitcoin CME futures was launched on CME Globex at 22:00 on January 14, 2020. Each contract (in USD) will consist of 5 Bitcoin and will be paid centrally to avoid counterparty risks. CME uses the flow of transaction information from significant Bitcoin exchanges to calculate the price of Bitcoin more accurately.
CME, one of the first exchanges hosting Bitcoin futures contracts – along with the Chicago Stock Exchange in 2017 – first announced plans to introduce Bitcoin futures options on November 12, 2019. According to CME, the new product has been published in response to growing interest in cryptocurrencies and customer demand for tools for managing exposure to Bitcoin.
Crypto derivatives market surged
This news comes in the context of Bitcoin futures traders reportedly generating at least $ 20 billion in daily volume last week. According to aggregated volume data for market analyst Skew’s Bitcoin futures products, global futures trading volume exceeded $ 20 billion in just January 8.
The derivative has been traded on many exchanges since 2014, but CME is one of the first platforms to provide licensed products to investors since the first launch of futures contracts paid by cash in December 2017.
The volume of options is calculated by the trading platform | Source: Skew
Bitcoin options began to become widely available in 2019. And in the past week alone, daily trading volumes have exceeded $ 90 million, according to analyst data provider Skew. Approximately 95% of options trading comes from the Dutch Deribit exchange.
Binance’s derivatives trading platform FTX yesterday also launched its Bitcoin options contracts. Although this new product could not have the participation of American traders, the trading volume still reached $ 1 million within the first two hours of opening.
Looks like 55 contracts went through on CME’s BTC Options first day of trading, approx. $2.3mln notional.
100% were Calls.
Source: CME (preliminary estimates) pic.twitter.com/M7StLOApom
— skew (@skewdotcom) January 13, 2020
CME had previously reserved a plan to launch options a few days before the launch of the Bakkt futures contract in September. ICE’s rival platform was one step ahead, and the option was launched in early December 2019. CME Previously also said there are no plans to deploy new futures.
In a statement on Friday, global market strategy director Nikolaos said there were signs that institutional investors were ready for the CME contract. The open interest rates of Bitcoin futures rose 69% in the last days of the year.
Bitcoin futures open interest (OI) started the first four trading days with 5.4K contracts on January 7, up 69% from year-end OI. https://t.co/rkPfdlSyeB pic.twitter.com/Dnm1h4Jrcu
— CMEGroup (@CMEGroup) January 9, 2020
Bitcoin over the past 24 hours has seen a jump from $ 8,000 to $ 8,400, a growth of nearly 3%.
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