Huobi, a leading Bitcoin futures and spot exchange, has announced its plans to launch Bitcoin options trading in the third quarter of 2020.
Per the press release shared with Finance Magnates, the Singapore-headquartered exchange is going to add the new derivatives instrument on its existing futures platform where it offers perpetual contracts.
Huobi is one of the largest Bitcoin futures exchange, currently standing strong in the second position in terms of daily trading volume only following Binance, according to Coinmarketcap.com. The platform made its names with Bitcoin perpetual contracts, making them mainstream in the crypto industry.
The exchange explained that Bitcoin options are very similar to the futures, but the contract holders do not have any obligation to buy the asset upon maturity, instead the trader can exit by paying a pre-decided premium.
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Rising demand for crypto derivatives
Huobi is jumping introducing the instrument when the market demand for Bitcoin options is skyrocketing. But Huobi will have to face some fierce competition from leading platforms including Deribit, CME Group, and even Binance.
Last month, CME Group reported that its Bitcoin options demand soared 10x, but Deribit is still holding 80 percent of the market.
Huobi detailed that its options contracts will be in European style, meaning the buyer of the Option can only be exercised at the expiration. The exchange also highlighted that initially only Bitcoin options will be in the offering, but did not specify any plans to expand with other digital assets.
“Huobi also offers incredibly low minimum positions of 0.001 BTC. This means that traders can open an Options position with around $10 compared to other exchanges where the minimum position can cost as much as 1 BTC,” the exchange noted.
The contracts are still in the alpha testing phase and after the completion, Huobi Futures will announce the official launch on Web and API, following an offering on the mobile trading application.