CME Group recently revealed plans to introduce options on its Bitcoin Friday futures, with the new contracts set to launch on February 24. This move marks CME’s first financially settled crypto options product, pending regulatory approval.
Giovanni Vicioso, CME Group Global Head of Cryptocurrency Products, emphasized that these new options aim to provide traders with tools to manage short-term Bitcoin price risk. The contracts will feature expiries every business day, Monday through Friday, allowing for more precise risk management compared to traditional weekly options.
The financial settlement of these options adds convenience for traders seeking to hedge Bitcoin price movements without the complexities of physical settlement. This development 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 in September, they have quickly become one of CME Group’s most successful crypto product offerings. With over 775,000 contracts traded and an average daily volume of 9,700, these futures have garnered significant interest, with 44% of contracts traded during non-US hours.
The introduction of options on Bitcoin Friday futures comes at a time of heightened institutional interest in Bitcoin. As private companies and even countries like the US, Brazil, Switzerland, and the Czech Republic explore adding BTC to their treasuries, there is a growing demand for crypto risk management tools.
Market participants view CME Group’s new option suite as a valuable tool for hedging and expressing nuanced views on Bitcoin. Galaxy Global Head of Trading, Jason Urban, highlighted the flexibility and cost-effectiveness of these options for optimizing risk management in response to evolving market conditions.
As the crypto landscape continues to evolve, tools like options on Bitcoin Friday futures provide traders with the means to navigate price volatility and manage risk effectively.
