CME Group Introduces Options on Bitcoin Friday Futures
CME Group announced on Jan. 29 that it will be launching options on its Bitcoin Friday futures, with the new contracts set to go live on Feb. 24.
First Financially Settled Crypto Options Product
This move marks CME’s first financially settled crypto options product, pending regulatory approval.
Managing Short-Term Bitcoin Price Risk
Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products, emphasized that the options aim to provide traders with tools to manage short-term Bitcoin price risk. He stated:
“Building on the success of our Bitcoin Friday futures, the smaller size of these contracts, along with daily expiries, offer market participants a capital-efficient toolset to effectively adjust their bitcoin exposure.”
Daily Expiries for Precise Risk Management
Unlike traditional weekly options, these contracts will have expiries every business day, Monday through Friday, enabling more precise risk management strategies.
Financial Settlement for Convenience
The new options’ financial settlement feature adds convenience for traders looking to hedge Bitcoin price movements without the complexities of physical settlement.
Complementing Existing Suite of Crypto Derivatives
Options on Bitcoin Friday futures will complement CME’s existing suite of physically settled crypto derivatives, including Bitcoin, Ethereum, Micro Bitcoin, and Micro Ether futures.
Success of Bitcoin Friday Futures
Since the debut of Bitcoin Friday futures on Sept. 29, they have quickly become one of CME Group’s most successful crypto product launches, with over 775,000 contracts traded and an average daily volume of 9,700. Notably, 44% of contracts were traded during non-US hours.
Demand for Crypto Risk Management Tools
With institutional interest in Bitcoin on the rise and private companies and countries exploring its potential, the launch of options on Bitcoin Friday futures comes at a crucial time.
Joshua Lim, Global Co-head of Markets at FalconX, highlighted the importance of CME Group’s new option suite for hedging and expressing nuanced views on Bitcoin.
“Given the increasing density of tradable catalysts in crypto, CME Group’s new option suite on Bitcoin Friday futures provides the granularity that market participants need for hedging and expressing nuanced views on Bitcoin.”
Galaxy Global Head of Trading, Jason Urban, also praised the flexibility and cost-effectiveness of these options for optimizing risk management in response to evolving market conditions.