CME Group Unveils Bitcoin Options: A New Tool for Crypto Risk Management

Coin WorldWednesday, Jan 29, 2025 7:38 pm ET

1min read

CME Group, a leading global derivatives marketplace, has announced its plans to introduce options on its Bitcoin Friday futures starting February 24. This new product is set to be the first financially settled crypto options offering from CME Group, pending regulatory approval.

Giovanni Vicioso, CME Group's Global Head of Cryptocurrency Products, stated that the new options contracts aim to provide traders with tools to manage short-term Bitcoin price risk. He highlighted that the smaller size of these contracts, along with daily expiries, offers market participants a capital-efficient toolset to effectively adjust their Bitcoin exposure.

The new options contracts will feature expiries every business day, Monday through Friday, allowing for more precise risk management compared to traditional weekly options. Additionally, the financial settlement of these options adds convenience for traders seeking to hedge Bitcoin price movements without the complexities of physical settlement.

Introducing options on Bitcoin Friday futures will complement CME Group's existing suite of physically settled crypto derivatives, including Bitcoin, Ethereum (ETH), Micro Bitcoin, and Micro Ether futures. Since their debut on September 29, Bitcoin Friday futures 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. Notably, 44% of contracts were traded during non-US hours.

The launch of these new options contracts comes at a time when institutional interest in Bitcoin is high. Private companies are adding BTC to their treasuries, and even countries like the US, Brazil, Switzerland, and the Czech Republic are considering it for their reserves. Joshua Lim, Global Co-head of Markets at FalconX, and Jason Urban, Galaxy Global Head of Trading, both expressed enthusiasm for the new options, highlighting their potential for hedging and optimizing risk management in response to shifting market conditions.

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