- At the end of the month, the world’s largest derivatives exchange will begin offering micro options for Bitcoin and Ethereum.
- Contracts representing one tenth of each cryptocurrency will be offered not only to institutions, but also to retail traders, for whom the instruments were designed.
- The company plans to launch microoptions on March 28 after a regulatory review.
CME Group reported that these contracts would represent a tenth of each cryptocurrency, and they will be available not only to institutions, but also to retail traders, for whom they were designed.
The company plans to launch microoptions on March 28 after a regulatory review.
Traders and investors use options contracts for different strategies. Investors can use options as a way to guarantee they will be able to purchase or sell a stock at a certain price.
In addition, more fast-paced traders can profit by buying out those insurance contracts and taking on the risk.
In spite of becoming mainstream in the past year, cryptocurrencies have remained volatile, making them ideal for derivatives to protect against the wild price swings.
CME BTC and ETH Micro Versions
In a similar attempt to bring in retail attention, CME launched micro versions of its Bitcoin and Ethereum futures in March last year after experiencing a decline in volume.
It had done this in a similar bid to draw in retail attention. Approximately a tenth of the size of a bitcoin, “the smaller contract size allows traders of all sizes – from institutions to small and mid-sized traders – to get exposure to bitcoin prices, or hedge existing spot bitcoin positions,” said Daniel Ryba, executive director of futures at E*TRADE.
The CME reported a revenue of $1.2 billion and an increase of 5% in daily volume in its second quarter financial results following the release of these micro crypto futures.
The micro futures have generated $100 million in revenue so far, a business that didn’t exist just a couple of years ago, according to Chief Financial Officer John William Pietrowicz.
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Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
