CME Reveals Details of Upcoming Bitcoin Options Contracts

CME Group has just published the specifications for its upcoming bitcoin options contracts.

The Chicago exchange revealed Wednesday that each contract would be based on one of CME’s bitcoin futures contracts (which in turn consists of five bitcoin); the contracts would be quoted in U.S. dollars per bitcoin with a tick size of $25 (or $5 for reduced tick sizes); and would trade from 5:00 P.M. Central Time Sunday to 4:00 P.M. Central Time Friday.

An FAQ added that the options will settle into one futures contract when trading ends.

CME first announced its intention to launch options contracts on top of its existing bitcoin futures product last month, targeting a launch date sometime in the first quarter of 2020, pending regulatory approval.

CME’s bitcoin options will be similar to the options contracts it offers on top of other futures products, he said, and offers traders a way of hedging their risks against spot and futures positions.

CME published the specifications days after competitor Bakkt announced it would begin offering a similar product on its own futures contracts beginning in December 2019.

Bakkt announced last week that it would begin offering options on its physically-settled bitcoin futures contracts beginning Dec. 9. Bakkt CEO Kelly Loeffler said in a blog post that the Intercontinental Exchange’s subsidiary had received customer feedback asking for the product.

In a September interview, CME global head of equity index and alternative investment products Tim McCourt said the new product was also inspired by customer feedback.

“Where we’re at in the process, we’ve done extensive validation with members and after this announcement we’ll continue to engage with market participants who have input on how the product should be designed and …. We’ll continue to make sure it meets their needs,” he said.

“I think the response has been strong, we’re excited about bringing to market. It’s not too dissimilar to the futures when we are engaging with customers … The fact that options will be listed on a regulated venue and will be centrally cleared continue to resonate with the marketplace.”

Tim McCourt image via CoinDesk archives