The Chicago Mercantile Exchange (CME) Group has announced plans to launch options on Bitcoin Friday futures starting February 24.
The new contracts represent CME’s first crypto options with financial settlement, offering traders daily expiry options throughout the business week.
Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products said the new options provide traders with “even greater precision to manage short-term bitcoin price risk”.
“Building on the success of our Bitcoin Friday futures, the smaller size of these contracts, along with daily expiries, offer market participants a capital-efficient toolset to effectively adjust their bitcoin exposure.”
CME’s BTC Friday futures are the group’s “most successful” crypto product. 775,000 contracts have traded since their September launch, with an impressive average daily volume of 9,700 contracts. Additionally, 44% of trading happens during non-US hours, which shows demand for these instruments is global and not only centred around the US.
CME: Crypto Options An Important Market Addition
CME Group said the moves is a strategic response to evolving market needs, particularly as institutional traders are requesting more precise tools for managing cryptocurrency exposure. The new options will complement CME’s existing physically-settled options on various crypto assets, including BTC, ETH and their micro counterparts.
“Financially-settled options on Bitcoin Friday futures will complement CME Group’s existing suite of physically-settled options on Bitcoin, Ether, Micro Bitcoin and Micro Ether futures, providing additional risk management flexibility to investors.”
Major market participants have welcomed the development. FalconX’s Global Co-head of Markets, Joshua Lim, emphasised the product’s importance given the “increasing density of tradable catalysts in crypto”, while Galaxy’s Global Head of Trading, Jason Urban, described the contracts as a “timely, important addition to the market” that offers flexible and cost-effective risk management solutions.
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Recently, the US Securities and Exchange Commission (SEC) approved the first options on BTC ETFs for US trading on iShares Bitcoin Trust ETF (IBIT) and extended similar permissions to the New York Stock Exchange and Cboe Global Markets.
Options contracts gives traders the right to buy (call) or sell (put) an asset at a set price. This way one can take advantage of market price movements through these options without having to actually own the underlying asset.
