CME Group announced plans to launch options for Micro Bitcoin and Micro Ether futures in a March 1 announcement. These new products will provide a tenth the exposure to the asset, opening up the investment products to a wider market that includes individual traders.
These new options will be added to the existing Bitcoin options contracts, which were launched in 2020 and sized at 5 BTC.
Futures contracts require that investors sell them at a certain date. Options allow an investor the option to purchase or sell at a specified price at any given time, but not to.
Expanding the market reach
It added that traders will be able to express their long-term or short-term views using the new options. There are also options for weekly expiry dates as well as Monday, Wednesday and Friday options.
CME Group offers micro-futures on the top crypto assets. However, it is adding flexibility to its options products. Tim McCourt, Global Head of Equity and FX Products, stated that almost 5.3 million micro BTC and Ethereum futures contracts were traded in less than one year. He then added:
“Based on the strength of the underlying contracts’ liquidity, our micro-sized options will allow traders of all sizes to hedge market-moving events more precisely and flexiblely or fine-tune their exposure in cryptocurrency markets.”
John Harris, Akuna Digital Assets CEO, stated that his company believes options on these contracts will give existing market participants more flexibility in seeking cost-efficient exposure, as well as open the market for new participants who prefer the granular sizing.
Alphabet, Google’s parent company, invested $1 billion in the CME Group in November.
Chicago Mercantile Exchange. Source: Yahoo
There is no spot ETF in sight yet
CME futures products have been the only underlying contract for all Securities and Exchange Commission-approved Bitcoin ETFs. U.S. regulator refuses to approve a spot-based fund that is backed by physical assets. Financial experts and politicians have been pressing the regulator to act, but they still refuse to approve a spot-based fund that will be backed by the physical asset. The watchdog continues to remain resolute, citing the usual investor protection excuses.
The much-anticipated conversion from the Grayscale Bitcoin Trust to a spot ETP may be the first approval of this year. In anticipation of this, the $31 billion fund trades at a discount of -24.45%.
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