Chicago Mercantile Exchange To Launch Bitcoin Options In Early 2020
The Chicago Mercantile Exchange (CME Group) officially confirmed its plan to launch options based on existing bitcoin futures this Friday.
As the company explains, the decision to launch bitcoin options was dictated by “the growing interest in cryptocurrencies and customer demand for tools to control access to bitcoin.” The launch of the tool will take place in early 2020.
Unlike futures, where both parties are required to fulfill the terms of the contract, an option gives its buyer the right, but not the obligation, to buy or sell an asset at a predetermined price at a certain point in the future. In this case, the seller of the option cannot refuse to fulfill the terms of the contract. He compensates for additional risks with a premium that the buyer transfers to him when concluding a contract.
“Based on the increasing customer demand in our bitcoin futures market, we believe that the launch of options will give customers additional flexibility in their trading process and provide them with another tool to hedge their bitcoin price risks,” said Tim McCourt, head of alternative investment products at CME. “These new products are aimed at helping institutions and professional traders manage access to bitcoin in the spot market, as well as hedge futures positions in a regulated exchange environment.”.
Bitcoin futures contracts are currently traded on the CME platform, which were launched at the end of 2017. Opening options based on existing futures will require additional regulatory assessment.
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