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The Chicago Mercantile Exchange (CME) Group announced plans to introduce options related to its bite-sized Bitcoin Friday futures, aiming to cater to the growing interest from retail investors in cryptocurrency derivatives. These cash-settled options are scheduled to start trading on February 24, subject to regulatory approval.
The upcoming options will be an addition to CME’s current offerings, which include physically settled options on Bitcoin (BTC) and Ether (ETH) futures. Giovanni Vicioso, CME’s global head of cryptocurrency products, highlighted that the new options are designed to offer traders enhanced precision in managing short-term Bitcoin price risks. He also noted that the smaller size of these contracts, along with daily expiries, will provide a capital-efficient way for market participants to fine-tune their Bitcoin exposure.
Bitcoin Friday futures, launched by CME on September 29, are significantly smaller than other retail-focused Bitcoin futures products, with each contract representing one-50th of a Bitcoin. This size is smaller compared to Coinbase’s “nano” Bitcoin futures, which are sold in increments of one-100th of a Bitcoin.
Since their inception, Bitcoin Friday futures have seen substantial trading activity, with more than 775,000 contracts traded, averaging a daily volume of 9,700 contracts. This popularity underscores the demand among retail traders for more accessible cryptocurrency investment products.
The addition of Bitcoin Friday futures options contributes to the growing landscape of cryptocurrency options in the United States. In September, the US Securities and Exchange Commission (SEC) approved Nasdaq’s request to list options on the iShares Bitcoin Trust ETF (IBIT), marking the first approval for options on spot Bitcoin ETFs for trading in the US. Following this, the SEC granted similar authorizations to the New York Stock Exchange and Cboe Global Markets (NYSE:CBOE) in October.
Options are a form of derivative that give the holder the right, but not the obligation, to buy or sell the underlying asset at a specified price. In the US, the Office of the Comptroller of the Currency steps in to settle trades if one party fails to meet the terms of the contract. Investment managers believe that the introduction of options on Bitcoin will further encourage institutional adoption and potentially lead to significant gains for Bitcoin investors.
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