CME Group Optimistic on Bitcoin Options among Asian Traders
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The crypto exchange provider, Chicago Mercantile Exchange Group, has said it expects Bitcoin futures contracts to be in demand from cryptocurrency miners and traders within Asia. Moreover, the futures exchange firm is aiming to launch the new digital coin derivative product during the first quarter of 2020.
Additionally, its Bitcoin futures contracts turned out to be a great success among institutional investors; and the group is optimistic the launch of the Bitcoin options will be a great hit as well. Bitcoin options contracts allow investors to purchase or sell an underlying asset at a particular “strike price,” on or before the expiry date. Through this, traders can take advantage of any price movements. In futures contracts, one is obligated to buy or sell at a contracted time and price.
Furthermore, approximately 50% of the trading volumes for CME’s Bitcoin futures are Asian and European investors. This development has raised the expectations of the exchange firm. They are optimistic their options will be popular, especially among Asian traders.
According to Tim McCourt, Global Head of Equity Products and Alternative Investments, the trading for Bitcoin Futures contracts has experienced a massive surge recently. According to him, this would pave a way for other derivative products to gain success. Futures contracts enjoyed their biggest day on 13th May when a record 34,000 Futures contracts; equivalent to 1, 70000 Bitcoin were traded.
“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 [assets] price”
In Conclusion
Bitcoin Futures would turn beneficial for Bitcoin miners. Miners can utilize the derivatives contract to hedge their production costs. Some Chinese miners are already using the contracts to hedge the price. This is a reason as to why CME Group has a lot of optimism for the Asian market.