Bitcoin Futures Options: Movement and market impact in 2020

The CME Group has recently announced the launching date of ‘Options on Bitcoin Futures.’ The Bitcoin Futures options that will be launched on the 13^th of January 2020 are likely to be creating a new layer of complexity on the Bitcoin market, thereby welcoming potential investors.

Bitcoin Futures Options by CME

With the new financial tool of the Bitcoin Futures options, more exchanges are likely to come on board in a couple of months. The Bitfinex exchange was once the leader of the spot market and is now ready with its version of the derivatives. Furthermore, Bakkt, the rival of the CME Group, has scheduled the options for the 9th of December. Binance has also a restricted offering via Binance JEX, a newly acquired platform for trading.

Purchasing the futures contract implies an obligation to be settled at some point, either in cash or through physical delivery. Whereas, options are different and complex, as, it offers the right and not the obligation to purchase futures contract at some certain time and a certain price. So, either the options expire, or they could be settled in underlying contracts of futures.

Hence, the option of buying options does offer a mode of avoiding exposure in unfavorable times. Moreover, options also offer a mode of getting exposed to some assets whilst keeping a small margin for trades. However, risk mitigations will come at a price. Bitcoin Futures options are likely to have a particular premium that is based on the underlying assets’ volatility.

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