Deribit releasing daily options to face increasing competition in the crypto options market

Deribit, a trade European-style options platform, announced that it would begin providing daily bitcoin index options Feb. 3. At 08:00 UTC every day, customers will be able to start trading options at a fixed price of $125. Contracts will expire two days after being listed.

Deribit’s post said that the exchange would try to offer contracts that move within a 5-percent range around at-the-money (ATM) levels. The news gives traders a much more extensive range of expiry dates, and the platform will now have contracts that expire every day.

The post read that these short-term expiries are especially interesting for investors and traders with a short-term view based on, for example, macroeconomic data or events. Deribit’s chief communication officer Luuk Strijers told that the exchange had introduced daily options in response to “market demand.”

Dynamic crypto options market

Since launching in 2016, Deribit has led the cryptocurrency options market. Data from analytics firm Skew shows Deribit options made up nearly 90 percent, worth approximately $50 million of the total volume traded on Tuesday. In comparison, regulated platform Bakkt made no trades, and CME option contracts took place roughly 2 percent of the trading volume.


BTC Options – Volumes I Source: Skew

Even the data shows Deribit has stayed in pole position and, as the graph below shows, shown a record month for volume in December. But the monthly market share has also gone down, dropping approximately 10% in January.


BTC Options Venue Volume and Deribit Market Share I Source: Skew

That happened at the same time with rival options exchanges, which also experience month-on-month increases in combined trading volume. This mostly appears to be coming from OKEx and CME, as Bakkt reported zero volume on its own platform last week.

Regulated bitcoin options have only begun trading in the past couple of months. Bakkt and CME launched options trading just before the festive season, launching its options contracts earlier in January. OKEx launched unregulated options contracts on Dec. 26.

The falling of Deribit’s market share not surprising

Emmanuel Goh, co-founder and CEO of Skew, said he was not surprised by the falling of Deribit’s market share to new competitors. The exchange already had the first-mover advantage, but that was always going to decrease as other companies enter the space.

OKEx has been able to instantly break into second place because it has an existing client base in Asia. According to Goh, what’s important is that “the pie is still growing,” with Deribit’s volumes increasing as part of a much more massive increase in the broader crypto options market.

But the adding of daily options could make Deribit more competitive. Mati Greenspan, the founder of analyst firm Quantum Economics, said adding new products usually helped an exchange extends its potential client base.

He said that each client is different and has different trading styles, strategies, and demands from their broker. So having more products helps the provider to satisfy more customers. A good broker will tend to understand their customers’ needs and will think about what they need when creating new products and services.

Like in traditional markets, Strijers said Deribit expects daily options will take up a “sizeable percentage of volumes.” With rising volatility in January 2020, he continued that we will see significant month-on-month growth again and only expect further growth due to the expansion of tradable options.

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