CME Group recently made an exciting announcement on Jan. 29, revealing plans to launch options on its Bitcoin Friday futures starting on Feb. 24. These new contracts will be the first financially settled crypto options product offered by CME, pending regulatory approval.
Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products, emphasized that the goal of this product is to provide traders with tools to manage short-term Bitcoin price risk. He highlighted the benefits of these contracts, stating, “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.”
Unlike traditional weekly options, these new contracts will have expiries every business day, Monday through Friday, allowing for more precise risk management. The financial settlement of these options adds convenience for traders seeking to hedge Bitcoin price movements without the complexities of physical settlement.
The introduction of 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. Since the launch 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, with 44% of contracts traded during non-US hours.
The launch of these options comes at a time when institutional interest in Bitcoin is on the rise. Private companies are adding BTC to their treasuries, and countries like the US, Brazil, Switzerland, and the Czech Republic are considering it for their reserves.
Industry experts, such as Joshua Lim, Global Co-head of Markets at FalconX, and Galaxy Global Head of Trading Jason Urban, have expressed their enthusiasm for the new options suite on Bitcoin Friday futures, highlighting the granularity it provides for market participants to hedge and express nuanced views on Bitcoin. These options offer a flexible and cost-effective way for traders to optimize risk management while adapting to changing market conditions.
Overall, the introduction of options on Bitcoin Friday futures by CME Group demonstrates the growing demand for crypto risk management tools in the market, catering to the needs of both institutional and retail traders looking to navigate the volatility of the cryptocurrency space.