Cryptocurrency traders have something to look forward to as the Chicago Mercantile Exchange (CME), the world’s leading derivatives exchange, Announced its plans to expand its suite of cryptocurrency options on May 22, pending regulatory review.
The Chicago-based exchange will now offer daily expiries for standard and micro size Bitcoin and Ethereum contracts every day of the business week, Monday through Friday. The move is a significant development for the crypto industry, giving traders greater flexibility and more opportunities to trade digital assets.
More options in the derivatives market for crypto investors
The Chicago Mercantile Exchange is one of the largest and best-known derivatives exchanges in the world. It was founded in 1898 as the Chicago Butter and Egg Board. It has become a global market for various financial instruments, including futures, options, and other derivatives.
CME is headquartered in Chicago, Illinois, and operates under the parent company CME Group. The exchange is regulated by the Commodity Futures Trading Commission (CFTC) and is a member of the National Futures Association (NFA).
CME Group’s suite of crypto options includes Bitcoin and Ether futures and options contracts, allowing investors to hedge against price volatility and speculate on market direction.
The contracts are cash-settled and have become increasingly popular with institutional investors to gain exposure to the crypto market without holding the underlying asset.
According to a press release, the new contracts will allow traders to manage short-term price risk. They will complement the monthly and quarterly expiries available on all Bitcoin and Ether options in futures contracts.
Additionally, options on micro-sized Bitcoin and Ether futures will add Tuesday and Thursday expiries to your existing Monday, Wednesday, and Friday contracts. Giovanni Vicioso, CME Group Global Head of Crypto Products, stated:
We are pleased to offer these new options contracts to provide market participants with greater precision and versatility in managing short-term bitcoin and ether price risk.
Increased institutional demand in this crypto sector
CME Group has reported a record daily nominal average of more than $3 billion for its Bitcoin and Ether futures and options complex in the first quarter of 2023. This significant increase in demand for liquid hedging tools from investors customers clearly indicates the growing interest in cryptocurrencies among institutional investors.
Trading highlights for Q1 2023 include Bitcoin futures and options exceeding 11,500 contracts, with average open interest at a record 24,094 contracts. On March 22, a record 2,357 Bitcoin options contracts were traded, and on March 31, open interest hit a record 14,700 contracts.
According to the press release, since the launch of Ether options contracts in September 2022, more than 4,600 contracts have been traded. A record 311 Ether options contracts were traded on February 22; on March 24, open interest reached 1,800 contracts. Giovanni Vicioso concluded:
Against a backdrop of increased market volatility in the digital asset sector, we continue to see clients turn to a trusted and regulated venue like CME Group for reliable and efficient cryptocurrency risk management products.
Featured Image from Unsplash, Chart from TradingView.com
