Everything you want to know: details of the first disclosure of Bitcoin options on the Chicago Mercantile Exchange

In September, the world's most diversified financial derivatives market, the Chicago Mercantile Exchange Group (CME), announced that it plans to launch its cash based on its approval in the first quarter of 2020, with regulatory approval. Bitcoin options trading for settlement of futures contracts.

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At the time, Tim McCourt, global head of the Chicago Mercantile Exchange's stock index and alternative investment products, said that in response to growing customer demand and strong growth in the bitcoin futures market, we believe the launch of Bitcoin options will Provide our clients with more trading flexibility and hedge their bitcoin price risk. The new product is designed to help institutional and professional traders manage bitcoin spot market exposures and hedge against bitcoin futures positions in regulated exchange environments.

Today, CME Group reiterated that it will launch options for Bitcoin futures in the first quarter of 2020 if approved by regulators. More importantly, it first announced some details of Bitcoin options:

  • Each option contract will be based on a bitcoin futures contract (which in turn consists of five bitcoins).
  • CME Group Bitcoin futures are based on the index provider CME CF Bitcoin Reference Rate (BRR), which is a bitcoin pricing product launched in 2016, representing “Bitcoin at 4 pm GMT” Daily dollar reference price."
  • Every day, BRR summarizes the trading volume of the main Bitcoin spot exchanges in a specific one-hour calculation window. This one-hour window is then divided into 12 five-minute intervals to calculate the weighted average of the BRR's volume in all 12 partitions.
  • Can be traded on CME Globex and CME Clearport.
  • Trading hours: 5 pm on Sunday – 4 pm on Friday (Central Time).
  • The contract will be quoted in US dollars with a minimum of 5 contracts.

On October 24th, Bakkt, a subsidiary of the New York Stock Exchange's parent company Intercontinental Exchange (ICE), the Encrypted Custody and Encrypted Derivatives Exchange, announced that it will launch its first Bakkt monthly Bitcoin futures contract on December 9. A Bitcoin option contract, and the option is regulated by the US Commodity Futures Commission.