CME Group, the world’s main derivatives market, has announced plans to introduce choices on its Bitcoin Friday futures beginning February 24, pending regulatory approval. These new contracts would be the first cryptocurrency choices from CME Group to be financially settled, with expirations obtainable every enterprise day, Monday by Friday.
Financially-settled choices, also called cash-settled choices, are derivatives contracts the place the settlement at expiration doesn’t contain the bodily supply of the underlying asset. As an alternative, the revenue or loss from the choice is calculated primarily based on the distinction between the choice’s strike value and the market value of the underlying asset on the time of expiration, and this quantity is then paid in money.
“We’re happy to supply these new choices that present merchants with even higher precision to handle short-term bitcoin value danger,” stated Giovanni Vicioso, CME Group’s International Head of Cryptocurrency Merchandise. “Constructing on the success of our Bitcoin Friday futures, the smaller measurement of those contracts, together with each day expiries, provide market contributors a capital-efficient toolset to successfully regulate their bitcoin publicity.”
CME Group stated these financially-settled choices will improve its lineup of different cryptocurrency derivatives, which already contains physically-settled choices on Bitcoin and Micro Bitcoin futures.
“Given the rising density of tradable catalysts in crypto, CME Group’s new possibility suite on Bitcoin Friday futures supplies the granularity that market contributors want for hedging and expressing nuanced views on Bitcoin,” stated Joshua Lim, International Co-head of Markets at FalconX.
Since their launch on September 29, Bitcoin Friday futures have change into CME Group’s most profitable cryptocurrency product, with over 775,000 contracts traded and a mean each day quantity of 9,700 contracts. Notably, 44% of trades occurred throughout non-U.S. hours, highlighting world demand.