CME Group Plans to Offer Bitcoin Options in 2020
September 20 2019 - 12:34PM
Dow Jones News
By Paul Vigna
CME Group Inc. on Friday said it planned to launch options on
its bitcoin futures contracts in the first quarter of 2020, the
latest move by an established market player to expand into the
crypto business.
Chicago-based CME has offered bitcoin futures since December
2017, when the price of bitcoin in the spot market briefly traded
as high as $19,800 during a wild bull market. These days the market
has cooled significantly, but there is still a small but growing
demand among institutional and retail traders for futures and
options.
"The market has continually asked us for this since the bitcoin
futures launch," said Tim McCourt, the head of equity index and
alternative investment products at CME.
Futures contracts allow traders to bet on whether the price of
an asset will go up or down. Assuming it receives the necessary
regulatory approvals, CME's bitcoin options would give traders
another avenue to hedging their bitcoin holdings, or betting for or
against the currency's moves.
The CME's announcement comes as rival Intercontinental Exchange
Inc. plans to launch its bitcoin futures product next week, the
first product for its crypto-based platform, Bakkt. Though the two
are obvious rivals, Mr. McCourt said the CME's announcement was
unrelated to ICE's operations.
"We've been looking at bitcoin options for a long time," he
said.
CME and Cboe Global Markets Inc. both started selling bitcoin
futures in 2017, but the latter eventually dropped its offerings
earlier this year, ceding the market to CME. Every new product,
from CME, ICE, and elsewhere, is another building block in what is
expected to eventually be an institutional market for
cryptocurrencies as their own asset class.
There are about 3,300 individual accounts trading bitcoin
futures at the CME, the company said. Roughly 7,000 contracts trade
each day. That is a small slice of the 4.3 million contracts traded
daily on the exchange across all its offerings, which include
derivatives tied to energy, stock indexes and interest rates.
--Alexander Osipovich contributed to this article.
(END) Dow Jones Newswires
September 20, 2019 12:19 ET (16:19 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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