BitOffer English
Published in

BitOffer English

CME And BAKKT Will Launch Bitcoin Options, The Market Is Expected to Be Bursting.

The Chicago Mercantile Exchange (CME) recently announced that it would launch bitcoin options in the first quarter of 2020. Each option contract will be based on one bitcoin futures contract, which in turn consists of five bitcoins, CME said. The contract will be quoted in USD, with a minimum offer of $25 (a minimum reduction of $5); The contract duration will begin trading at 5 p.m. CST on Sunday and close at 4 p.m. CST on Friday. Besides, the bitcoin option will settle as a futures contract at the end of the trade.

Last month, CME firstly announced that it intended to launch options trading based on its existing bitcoin futures trading products sometime in the first quarter of 2020, which is still pending regulatory approval. The bitcoin options of CME will be similar to options contracts it offers based on other futures products and provides traders a way to hedge spot trading and futures positions. CME released those details when its rival, BAKKT, announced that they would launch bitcoin futures & options contracts that are settled by physical on December 9, 2019.
We must notice that the options of CME and BAKKT will be operated based on bitcoin futures contracts, not bitcoin on the spot trading market. BAKKT is a futures contract by physical delivery, while Chicago’s bitcoin futures contract is settled in cash. There is a big difference between them. Because users of BAKKT get physical bitcoins when the futures contract expires and CME users get cash equivalents, the CME obviously has the upper hand due to that cash flow is much better as we all know. Also, behind the continued launch of bitcoin derivatives, this also proves the booming bitcoin derivatives market.
In general, the launch of bitcoin derivatives is the improvement for the market and a manifestation of the development of the market. Both futures and options are a way for investors to bet on bitcoin’s price trend without actually holding the cryptocurrencies, thereby avoiding the issues of regulatory and custodian. However, futures are usually faced with great risks, which will be affected by the fluctuation of the market, and there is a risk of being forced into liquidation, while the biggest risk of options is only the principal paid during the trading.

As with BTC options, which first launched by BitOffer, it was created by the professional Wall Street team as the first BTC options trading product in the crypto industry. BTC Options covers all the advantages options trading should have. With the features of “No margin” and “No fee”, users all own the opportunity to earn 1000X leverage profit no matter the market is bullish or bearish.
For Example:
When the price of BTC is $9,000, after analyzing, Mike and Tom hold the view that the price of BTC would keep going up, then Mike bought BTC in spot trading, Tom bought a BTC Options on BitOffer.

1. Mike spent $9,000 to buy one bitcoin.
2. Tom bought an options contract with $5.

After that, the price of BTC rose rapidly. Within 1 hour, the price of BTC rose from $9,000 to $9,500. If they sell it as the price now,

1. Mike earns $500 ($9,500 — $9,000) *1
2. Tom earns $500 ($9,500 — $9,000) *1

We can easily see that the profit of Mike and Tom are the same, but they spent quite different.
1. Mike spent $9,000 to earn $500, the rate of return is 5.5%.
2. Tom spent $5 to earn $500, the rate of return is 10,000%.

What if the price of BTC decreases?
Mike will lose $500 when the price of BTC drops from $9,000 to $8,500. At the same time, Tom only lost $5 if so. This is one of the advantages of BitOffer Options.

In conclusion, with BTC Options, we can own the right to enjoy “Unlimited profit but only limited loss”.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store