2019 has been a good year for the flow of institutional interest in Bitcoin Futures products, with a significant rise in curiosity around BTC derivatives and BTC Futures. In the same spirit, the Chicago Mercantile Exchange (CME) Group has officially released a statement, announcing that it will launch options on Bitcoin Futures on January 13, 2020.
This step was taken by the CME in response to the crypto-community’s interest in the digital assets space, alongside a growing demand for tools for effectively managing Bitcoin’s exposure. The CME also brushed over the details regarding contract units, that is, 1 Bitcoin Futures contract will be used for representing 5 BTCs. The official statement added that the block minimum will be fixed at 5 contracts for every individual trader. It went on to say,
“Option exercise results in a position in the underlying cash-settled futures contract. In-the-money options are automatically exercised into expiring cash-settled futures, which settle to the CME CF Bitcoin Reference Rate (BRR) at 4:00 p.m. London time on the last Friday of the contract month.”
With the aim of assisting traders, contracts are designed to help them with effective management and hedging of Bitcoin price risk in the balanced crypto-market. Also, CME aims to deliver services so that traders and hobbyists can save capital by a good margin, through margin offsets.
Previously, the CME Group had revealed its plan to move ahead with its idea of integrating options for BTC Futures by the first quarter of 2020. Further, Asia has emerged as the hub for crypto-related developments. Thus, the CME is looking forward to a higher interest rate towards BTC Options products in the Asian market. However, it is important to note that CME has no plans of launching physically-settled BTC contracts in the future.