Cryptocurrency Derivatives Series: Gear-Up For Bitcoin Hedging Via Options As CME Sets Launch Date

‘CME Group’ has made an announcement in September to unveil options on its Bitcoin futures contracts by Q1 of 2020.

The renowned derivatives marketplace, ‘CME Group’ has now announced that the options contracts would be available to its clients from January 13th, 2020, which is still pending for regulatory review.

Well, CME Group has the extensive derivatives mechanism through which clients can effectively hedge or speculate via benchmark options on futures across every investable asset class, with average daily volume of 4.3 million in 2019 to date. 

The company is now intending to improvise hedging and trading arrangements for their clients with such a derivatives instrument (Bitcoin options).

"Since the launch of our Bitcoin futures nearly two years ago, clients have expressed a growing interest in options as another way to hedge and trade in these markets," said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products. "We have worked closely with clients and the industry to establish a robust and increasingly liquid underlying futures market here at CME Group, and we believe Bitcoin options will now offer our customers greater precision and flexibility to manage their risk."

European and Asian traders make up around half the trading volume for Bitcoin futures, which would suggest that the upcoming CME BTC options may see a similar customer demographic. With the bulk of Bitcoin miners located in Asia, the CME’s prediction of high demand out of Asia will likely turn out to be correct.

Amid such constructive developments in the cryptocurrency industry, bitcoin prices have plunged back below $8,750 levels with some selling pressures.