Bitcoin Hits Monthly High Following Launch of CME Options

The long anticipated introduction of Bitcoin options from the CME Group has finally arrived, and its effect on the market has already been substantial. Data from CME’s official website confirmed that they reached volumes in excess of $2.3 million on the very first day of trading. The Bitcoin market reacted accordingly, climbing more than 7% to hit a monthly high of $8,725.

Room to Grow

Although this introduction of CME options had a significant impact on the market, Bitcoin options still have a lot of room to grow. Each Bitcoin contract corresponds to 5 BTC, so at $2.34 million in volume, that is 55 contracts that were traded. These are meager numbers when compared to the over $500 trillion that options contribute to the global derivatives market.

Hedging Risk

To many, options are seen as complex financial instruments only applied by experienced traders that are willing to take on loads of risk. There certainly is a lot to know in order to be a successful options trader, but that does not mean that they cannot be applied by the everyday trader. At their core, options simply allow traders to make speculative bets on the market. Another common misconception about options trading, most likely rooted in the endeavors of the heroes of r/WallStreetBets, is that options are as much of a gamble as they are an investment. The reality is, options provide a great way for traders to hedge their risk. With a volatile market like Bitcoin, this is an incredibly valuable insurance policy that can give traders some much needed peace of mind.

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