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CME To Add Options Trading In The First Quarter of 2020

CME To Add Options Trading In The First Quarter of 2020

The Chicago Mercantile Exchange (CME) is one of the leading exchanges in the crypto industry.

The exchange is popular for its Bitcoin futures contracts which have been fruitful since their inception. Bitcoin trading has flourished over this year, and many investors have taken an interest in futures contracts offered by the CME.

The exchange has announced that they will be adding options trading for Bitcoin in the first quarter of 2020 if they obtain the necessary regulatory approval.

More products for Bitcoin investors

Tim McCourt, an executive at CME, said that there is a growing demand for Bitcoin-related products and the market for these is continually expanding.

He added that these new products have been created to assist institutional investors and professional traders in managing spot market Bitcoin exposure.

The products will also help to hedge Bitcoin futures positions when these traders engage in a regulated trading environment.

The extension of products related to Bitcoin futures will barely surprise industry experts.

Since Bitcoin futures contracts came onto the market in 2017, demand for the product has skyrocketed. Trade volume for the contracts went down a bit in 2018, but it has since picked up significantly.

Over the last year, Bitcoin futures contracts have had an average daily trading volume of $350 million. These volumes are expected to continue to rise as the contracts continue to gain popularity among institutional investors.

Expansion of Bitcoin futures

The CME recognizes that there is a growing demand for Bitcoin futures, and they are working on expanding the contracts for investors on the platform.

Last week, it was reported that the CME has engaged the Commodity Futures Trading Commission (CFTC) in a bid to increase the limits imposed on open positions.

Currently, investors are allowed to have 1,000 contracts, worth 5,000 Bitcoins, per month. If the exchange manages to get regulatory approval to expand the contracts allowed per month, investors will be able to have 2,000 contracts per month, worth 10,000 Bitcoins.

At the current market rate for the leading crypto asset, investors will see their trading capabilities increase from $51 million to $102 million.

Intensifying competition in the futures market

The announcement of options trading coming to CME is a sign of the exchange’s endeavor to cater to more institutional investors and get ahead of the competition.

The much anticipated Bakkt platform is due for launch in a few days, and it comes with several attractive options for investors.

Bakkt will provide physically settled Bitcoin futures contracts and custodial services for Bitcoin, among other services.

This makes Bakkt a direct competitor of the CME, and this may be pushing the latter to create better trading options for its clients.

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      A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.