Bitcoin Options Introduction Subdued in Wake of Futures Letdown

As reported on Bloomberg, “Bitcoin advocates are taking a more measured approach over the introduction of options for the world’s largest cryptocurrency after the wild ride they took with futures.

“While the contracts that provide the right, but not the obligation, to buy or sell a specified amount of coins within a set time period have been available on some online exchanges, they’re heading for the mainstream, just as futures did during the height of the crypto mania in 2017.

“A consortium known as Bakkt, which includes the parent company of the New York Stock Exchange, began offering options earlier this month. CME Group Inc., one of the first U.S. regulated exchanges to offer Bitcoin futures, will launch their own options on Jan. 13.

“’It’s hard to say who exactly will show up on day one,’ Tim McCourt, global head of equity index products at Chicago-based CME, said in a phone interview.

“In the case of futures, the debut session on the Cboe Global Markets Inc.’s exchange in December 2017 triggered trading halts as volume surged beyond dealers’ expectations. A year and a half later, the Cboe stopped listing the futures as demand evaporated in the wake of the bursting of the crypto bubble in 2018.

“Up until now, options trading has been mostly a niche of professional traders. Average daily volume has hovered around $22 million for the past year, with more than 95% happening on just one exchange, Deribit, according to derivatives tracker Skew. That compares with $1 billion in daily volume for Bitcoin and about $10 billion for the Bitcoin futures market…”