CME Group, the world’s main derivatives market, has introduced plans to introduce choices on its Bitcoin Friday futures beginning February 24, pending regulatory approval. These new contracts would be the first cryptocurrency choices from CME Group to be financially settled, with expirations accessible every enterprise day, Monday via Friday.
Financially-settled choices, also referred to as cash-settled choices, are derivatives contracts the place the settlement at expiration doesn’t contain the bodily supply of the underlying asset. As an alternative, the revenue or loss from the choice is calculated based mostly on the distinction between the choice’s strike worth and the market worth of the underlying asset on the time of expiration, and this quantity is then paid in money.
“We are pleased to offer these new options that provide traders with even greater precision to manage short-term bitcoin price risk,” mentioned Giovanni Vicioso, CME Group’s World Head of Cryptocurrency Merchandise. “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 Group mentioned these financially-settled choices will improve its lineup of different cryptocurrency derivatives, which already contains physically-settled choices on Bitcoin and Micro Bitcoin futures.
“Given the increasing density of tradable catalysts in crypto, CME Group’s new option suite on Bitcoin Friday futures provides the granularity that market participants need for hedging and expressing nuanced views on Bitcoin,” mentioned Joshua Lim, World Co-head of Markets at FalconX.
Since their launch on September 29, Bitcoin Friday futures have turn into CME Group’s most profitable cryptocurrency product, with over 775,000 contracts traded and a mean each day quantity of 9,700 contracts. Notably, 44% of trades occurred throughout non-U.S. hours, highlighting international demand.
