CME Group has announced the introduction of options on Bitcoin Friday futures, with the launch scheduled for February 24, pending regulatory approval. These new contracts will be the first CME Group cryptocurrency options to be financially settled, with expirations available every business day from Monday through Friday.
These options will complement CME Group’s existing suite of cryptocurrency derivatives, which includes physically settled options on Bitcoin, Ether, Micro Bitcoin, and Micro Ether futures.
Since launching on September 29, Bitcoin Friday futures have become CME Group’s most successful cryptocurrency product. More than 775,000 contracts have been traded, with an average daily volume of 9,700 contracts. Nearly half of these trades, about 44%, occurred outside U.S. trading hours.
CME Group continues to expand its cryptocurrency product offerings as demand for regulated derivatives in the sector grows. The company remains focused on providing market participants with tools that offer flexibility and risk management solutions in the evolving digital asset space.
“Capital-efficient toolset to effectively adjust bitcoin exposure”
Giovanni Vicioso, Global Head of Cryptocurrency Products at CME Group, said: “We are pleased to offer these new options that provide traders with even greater precision to manage short-term bitcoin price risk. Building on the success of our Bitcoin Friday futures, the smaller size of these contracts, along with daily expiries, offer market participants a capital-efficient toolset to effectively adjust their bitcoin exposure.”
Joshua Lim, Global Co-head of Markets at FalconX, said: “Given the increasing density of tradable catalysts in crypto, CME Group’s new option suite on Bitcoin Friday futures provides the granularity that market participants need for hedging and expressing nuanced views on Bitcoin.”
Jason Urban, Global Head of Trading at Galaxy, said: “As a major liquidity provider in the digital asset derivatives space, we see CME Group’s introduction of options on Bitcoin Friday futures as a timely, important addition to the market. These contracts offer a flexible and cost-effective way for our trading desk to optimize risk management and provide tailored solutions to our counterparties navigating bitcoin price volatility.”
Bitcoin Friday futures are sized at one-fiftieth of one bitcoin and cash-settled to the CME CF Bitcoin Reference Rate New York Variant (BRRNY) at 4:00 p.m. New York time every Friday. A new BFF contract is listed every Thursday at 6:00 p.m. New York time for a Friday trade date, with market participants able to trade the nearest two Fridays at any given point.
When CME first introduced its plans to launch the CFF contract, several leading brokers welcomed the product, including Interactive Brokers, Plus500, and Webull.
BFF are weekly futures contracts that are to be cash-settled to the CME CF Bitcoin Reference Rate New York Variant (BRRNY) at 4:00 p.m. New York time every Friday. A new BFF contract will be listed every Thursday at 6:00 p.m. New York time for a Friday trade date, with market participants able to trade the nearest two Fridays at any given point. A Friday expiry allows these contracts to closely track the spot price of bitcoin, as well as help investors mitigate weekend price moves.
CME plans to launch spot Bitcoin trading
According to a recent Financial Times report, CME has been in discussions with cryptocurrency traders to create a regulated marketplace for spot Bitcoin trading. The platform, known for being the largest Bitcoin futures trading platform, is expected to be operated by Swiss-based currency trading platform EBS.
Spot trading involves the buying or selling of assets at the current market price, as opposed to futures trading, which allows traders to speculate on the price movements of cryptocurrencies without actually owning them. Despite the volatility of cryptocurrency prices, spot trading is considered to carry a relatively lower level of risk since traders are only exposed to the price movements of the assets they own. However, the returns on spot trades are generally not as high as those from futures trading.
Introducing spot Bitcoin trading on CME would enable traders to engage in basis trades, a strategy profiting from the small price differences between futures contracts and the underlying spot Bitcoin.
