The Chicago Mercantile Exchange (CME) Group’s forthcoming Bitcoin options are expecting to see a high demand in Asia.
CME Group’s global head of equity index and alternative investment products, Tim McCourt said that the ‘new crypto derivative product is expected to prove as popular as the exchange’s existing BTC futures’ as reported by South China Morning Post on Oct. 10.
Miners Can Hedge Their Cost
According to the report, as much as half of the volume for CME’s current BTC futures is accounted for by Asian and European traders.
“While futures give you a one-for-one exposure, whereby the movement of the underlying bitcoin translates directly to a specific dollar value per contract, an option gives you varying strike-price levels and can give you either downside protection, or upside exposure at a fraction of the underlying price.” Tim McCourt
‘Options contracts allow traders to purchase a right to buy (a call option) or sell (a put option) a given asset at a specified “strike price” determined on or before the contract’s expiration date.’
He also pointed to how the current trading of Bitcoin futures contracts among China-based miners has offered them a hedge during volatile times on spot markets.
The Bitcoin Derivate Market
Binance Research, the analytics arms of the major crypto exchange said that Bakkt partly caused the Bitcoin price to drop by 20%.
On Sept 23. Bakkt debuted its Bitcoin futures, three days later BTC/USD plummeted from near $10,000 to under $8,000.
Source: Cointelegraph.com | Image: CME Group