CME Group, the world’s leading derivatives marketplace, has announced plans to introduce options on its Bitcoin Friday futures starting February 24, pending regulatory approval. These new contracts will be the first cryptocurrency options from CME Group to be financially settled, with expirations available each business day, Monday through Friday.
Financially-settled options, also known as cash-settled options, are derivatives contracts where the settlement at expiration does not involve the physical delivery of the underlying asset. Instead, the profit or loss from the option is calculated based on the difference between the option’s strike price and the market price of the underlying asset at the time of expiration, and this amount is then paid in cash.
“We are pleased to offer these new options that provide traders with even greater precision to manage short-term bitcoin price risk,” said Giovanni Vicioso, CME Group’s Global Head of Cryptocurrency Products. “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.”
CME Group said these financially-settled options will enhance its lineup of other cryptocurrency derivatives, which already includes physically-settled options on Bitcoin and Micro Bitcoin futures.
“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,” said Joshua Lim, Global Co-head of Markets at FalconX.
Since their launch on September 29, Bitcoin Friday futures have become CME Group’s most successful cryptocurrency product, with over 775,000 contracts traded and an average daily volume of 9,700 contracts. Notably, 44% of trades occurred during non-U.S. hours, highlighting global demand.