We recently reported that the CME group are looking to bring a Bitcoin options product to the market in the first quarter of 2020.

I for one cannot wait for the release but you are able to trade options on BTC and ETH via Amsterdam through Deribit.

Either way, the US futures exchange are hoping that the product goes down well with its Asian userbase. CME Group’s global head of equity products and alternative investments Tim McCourt said he expects this to be as popular as bitcoin futures, which launched two years ago.

“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,”

If you are not familiar with options they are usually used as an insurance product to protect you against volatile movements in the spot markets.

Traders now use options for speculation and bet on the direction with a call (buy) or a put (sell) options. With options, you pay a premium for a certain price and on a call option for example if the price betters or moves above your strike price at the time of the options expiry you come away with a profit. This also works the same with a put option (sell), you can choose a strike price and a date of expiry. Pay the premium and if the price is below the strike you have chosen at the given date you make a profit. 

It may sound complicated but it will add more volume to the market and attract more institutional investors to the crypto space.

 

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