The Chicago Mercantile Exchange will launch bitcoin options in the first quarter of 2020

According to Coindesk's September 22 report, the derivatives market Chicago Mercantile Exchange Group announced that it will offer options trading for Bitcoin futures contracts starting in the first quarter of next year.

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(Source: pixabay)

The Chicago-based company launched Bitcoin futures as early as December 2017, while its rival Chicago Board Options Exchange (CBOE) also launched the product.

The Chicago Mercantile Exchange said in a statement on Friday that its purpose in launching Bitcoin options is to provide customers with "extra tools for precise hedging and trading." Currently, the product is awaiting review by regulators.

Tim McCourt, global head of stock index and alternative investment products at the Chicago Mercantile Exchange, said:

Based on growing customer demand and strong momentum in the Bitcoin futures market, we believe that the launch of Bitcoin options will provide our customers with additional flexibility to trade and hedge their bitcoin price risk. At the same time, these new products are designed to help institutional and professional traders manage bitcoin spot market exposures and hedge against bitcoin futures positions in regulated exchanges.

The company said in detail that since its launch in 2017, it has completed 20 “successful” futures settlements, and more than 3,300 individual accounts are trading these contracts. The company added that the average daily trading volume of bitcoin futures contracts to the Commodity Exchange is close to 7,000.

In March 2019, the Chicago Board Options Exchange suddenly changed its strategy and stopped trading Bitcoin futures products. This makes the Chicago Mercantile Exchange the only bitcoin futures provider in the United States.

However, the Chicago Mercantile Exchange is about to usher in a new competitor, and Intercontinental Exchange and its subsidiary Bakkt will start rolling out a new futures product. Unlike the cash contract of the Chicago Mercantile Exchange, Intercontinental Exchange will provide physical settlement of bitcoin futures products, which means customers will receive actual bitcoin instead of equivalent cash.