CME Releases Contract Specs for Upcoming Bitcoin Options

CME, the world’s largest futures exchange, today revealed preliminary contract specifications for its yet-to-be-launched options on Bitcoin futures contracts, which is expected to debut within the first quarter of 2020.

CME’s newest derivative will be priced off of the CME Bitcoin Bitcoin While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that While some may still be wondering what is Bitcoin, who created Bitcoin, or how does Bitcoin work, one thing is certain: Bitcoin has changed the world.No one can remain indifferent to this revolutionary, decentralized, digital asset nor to its blockchain technology.In fact, we’ve gone a long way ever since a Florida resident Laszlo Hanyecz made BTC’s first official commercial transaction with a real company by trading 10,000 Bitcoins for 2 pizzas at his local Papa John’s.One could now argue that Read this Term Reference Rate, an index that references pricing data from several cryptocurrency exchanges, currently made up of the likes of Bitstamp, Coinbase, itBit, Kraken, and Gemini. They’ll settle into the CME Bitcoin futures contract, which trades under the ticker BTC and equals five bitcoins.

With extra regulatory safeguards, the Chicago-based venue introduced Bitcoin futures in December 2017, marking a major step in the path to legitimate the cryptocurrency.

For investors interested in this new trading vehicle, the new contract follows the European-style options, which may be exercised only at the expiration date of the option, i.e., at a single pre-defined point in time. CME said it would offer BTC traders the potential to save on margins through margin offsets.

The tick size, or the minimum price movement, for CME options is $5 per bitcoin. This means that the price movement for a single contract will move in increments of $5 and amounts to a total of $25 per contract.

Bakkt also races to bring BTC options

CME’s BTC options are currently being reviewed by regulators, and the exchange operator confirmed that once the addition clears, they will be available for purchase.

Although overall price Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term has declined, trading in crypto derivatives and the race to offer new instruments surged this year. Just last week, ICE-baked Bakkt revealed plans to launch its own option contracts by the end of the year.

Both futures and options are a way for investors to bet on the trends of bitcoin price without having to actually hold the digital currency, which skirts regulatory and custodian issues. However, futures are in general riskier than options as the only financial liability for the latter is the premium paid at the purchase time. Futures contracts, on the other hand, involve maximum liability.