According to Tim McCourt, CME Group’s global head of equity products and alternative investments, Bitcoins options can become no less popular than futures contracts, South China Morning Post reported. They are expected to be launched in the first quarter of 2020.
Bitcoin options — protection against volatility?
A huge role in the trading of Bitcoin futures is played by Asian and European traders, which account for half of the market. Therefore, CME Group expects that the launch of the BTC options will attract a lot of attention precisely from the side of traders and miners in Asia. If everything goes well, options will be launched in the first quarter of 2020.
Despite the pullback in bitcoin prices, customer interest in CME Bitcoin futures remained strong during Q3 with daily OI of over 4.6K contracts, up 61% vs Q3 2018. https://t.co/MiMqZ52JmS pic.twitter.com/WiQBA0mK0o— CMEGroup (@CMEGroup) October 9, 2019
Futures options allow you to buy or sell an underlying asset at a specific “strike price” on or before the expiration date. This feature allows you to make a profit or to avoid losses without actually owning a futures position, which means controlling the price risks of Bitcoin. Here's what McCourt himself said about this:
“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.”
The head of CME Group also believes that Bitcoin options will allow Asian cryptocurrency miners to more accurately insure the cost of their production. This practice already exists in China, where miners use bitcoin futures for hedging.