The CME Group is all set to launch yet another Bitcoin derivatives product in the form of ‘Bitcoin Options’ at the start of next year. The Bitcoin Futures contracts ended up being a massive success amongst institutional investors with CME hoping the Bitcoin Option feature will see similar traction.
Bitcoin Options contracts will allow investors to buy or sell an underlying asset at a specific strike price on or before the expiry date. With this, traders will be able to take advantage of any price movement. This is unlike the futures contracts where they are obligated to buy/sell at a designated price and time.
As reported by AMB Crypto:
“Almost 50% of the trading volumes for CME’s Bitcoin Futures came from Asian and European investors, a development which has got the hopes of the exchange higher as it expects their Options contracts to be as popular, especially among Asian traders.”
Global Head of Equity Products and Alternative Investments, Tim McCourt said that the trading for futures contracts has seen a great surge over the past few months, something which would set the way for other derivative products to be more successful. In fact, back in May, the system recorded a 34k futures contracts. This is equal to 1,70000 Bitcoin being traded and it is also the biggest day for Bitcoin Futures Contracts.
McCourt says that with Bitcoin Options, traders would be able to manage their risks much better. He said
“While futures give you a one-for-one exposure, whereby the movement of the underlying bitcoin translates directly to a specific dollar value per contract, an option gives you varying strike-price levels and can give you either downside protection, or upside exposure at a fraction of the underlying [assets’s] price”
It will be interesting to see how this situation plays out. For more news on this and other crypto updates, keep it with CryptoDaily!