JPMorgan Could Launch CME Bitcoin Options Soon

Andrew Cummings
January 14, 2020

The FAQ page for this product says that "upon termination of trading, in-the-money options, expire into 1 bitcoin futures contract which immediately cash settles to the CME CF Bitcoin Reference Rate (BRR)".

This was hinted by JPMorgan Chase &Co and reported by Bloomberg.

At the end of 2017, the CME launched Bitcoin futures contracts on its world-renowned derivatives exchange, opening up the cryptocurrency market to a swath of new investors, namely institutions and other large investors that couldn't hedge their bets in this market as well before the launch.

Panigirtzoglou also said, "This unusually strong activity over the past few days likely reflects the high anticipation among market participants of the option contract".

Options are tradeable securities that give the holder an option, but not an obligation, to buy or sell an underlying asset - in this case, bitcoin futures contracts - at a given price and at a predetermined date in the future. At times it has appeared to be a drag on the price, such as when ICE debuted its new futures contract in September.

CME Group Inc. announced the launch of bitcoin-contracts for 13 January 2020.

Separately, Bitcoin's intrinsic value has been rising, but remains below the market price following a significant divergence in the middle of previous year, the report said. JPMorgan calculates the intrinsic value of BTC by treating the world's leading cryptocurrency as a commodity and taking its marginal cost of production into account.

Since last week, the price of Bitcoin has risen 15% and the volume, according to one report from a cryptocurrency research firm, has almost doubled, boding well for bulls if momentum can be maintained. But "the gap has not yet fully closed, suggesting some downside risk remains".

"The launch of listed options on futures is a significant step in the direction of increasing exposure to Bitcoin", McGlone said. We hope that we have succeeded by giving you the full details and information.

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