Galaxy Digital and XBTO Submit First Block Trade on Bakkt BTC Options

Bakkt Bitcoin options settle into the underlying futures contract two days prior to expiry on ICE Futures U.S.

(ICE), the parent company of the New York Stock Exchange (NYSE), today announced the first block trade of its options on BTC monthly bitcoin futures was submitted to its US futures marketplace. The first trade was executed between Galaxy Digital Trading and XBTO.

The ICE’s statement comes on the heels of another milestone announced earlier this week when Bakkt said that over 1,000 cash-settled futures contracts had been traded in Asia within a few hours of the launch.  The ICE-backed crypto platform now offers four types of regulated bitcoin derivatives products.

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“Based on our benchmark physically delivered bitcoin futures, these options contracts offer our customers a capital-efficient new tool for trading and for managing volatility, price risk and income generation,” said Trabue Bland, President of ICE Futures US.

The announcement’s timing is also interesting as Bakkt has a new competitor seeking to launch the same product, namely CME Group, which revealed plans to launch its own option contracts on January 13, 2020.

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Bakkt Bitcoin (USD) Monthly Options, the first CFTC regulated option on a futures contract for bitcoin, settles into the underlying futures contract two days prior to expiry on ICE Futures U.S. Price discovery has no exposure to unregulated bitcoin spot markets.

Chicago-based CME also offered more insights about its upcoming crypto derivatives two weeks ago. The BTC options will be priced off of the CME Bitcoin Reference Rate, an index that references pricing data from several cryptocurrency exchanges, currently made up 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.

The CME touts the benefits of options as the potential to save on margins, through margin offsets.

“The advent of centrally-cleared bitcoin options on a regulated U.S. exchange is a major milestone for this market. We believe the development of the institutional market infrastructure leads to deeper liquidity in digital assets,” said Josh Lim, Head of Trading Strategy at Galaxy Digital Trading.


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