Hello everyone, I am Conan. Recently, there has been a big news in the blockchain industry. The Chicago Mercantile Exchange (CME) announced that the highly anticipated Bitcoin options have been opened for trading. CME Bitcoin futures options have been launched on CME Globex at 16:00 UTC time on Monday (20:00 Beijing time on Monday).
As a part of the Bitcoin derivatives market, options began to focus on the second half of last year after a long period of deployment by institutions. Bakkt started offering options services last December.
So what exactly are options?
Option is a right, which is divided into call option and put option. For example, the current price of Bitcoin is 8000, and those who are bullish on Bitcoin buy a call option for $50, and the expiration date is one month later. That means he has the right to spend $8,000 to buy one bitcoin a month later. People who are bearish on Bitcoin buy a put option for $50, and have the right to sell one Bitcoin for $8,000 a month later.
One month later, Bitcoin rose to 9000, and those who are bullish can get 9000-8000-50=950 US dollars. If the bearish person wants to fulfill the contract, he will lose $1,050. If he chooses not to perform the contract, he will only pay $50 for the option.
The reverse is also the same.
The above example is just a model, and there are more complex requirements in actual operation.
What are the characteristics of options launched by CME?
1. Based on existing active Bitcoin futures products.
Each option contract will be based on a bitcoin futures contract (which in turn consists of five bitcoins), which will be quoted in U.S. dollars with a tick size of $25 (with a reduced tick size of $5).
2. Cash delivery.
After the option contract is delivered, the investor gets the equivalent cash. The options contract launched by Bakkt uses physical delivery, and investors will receive a corresponding amount of BTC after delivery.
3. Prices are based on CME's BBR index which is updated daily.
BRR: Bitcoin Reference Rate, refers to the Chicago Mercantile Exchange CF bitcoin reference exchange rate, as a daily reference exchange rate for the US dollar price of bitcoin.
A spokesman for the Chicago Mercantile Exchange Group (CME) said that the latest bitcoin options traded 55 contracts on the first day, equivalent to about 275 bitcoins, worth about $2.1 million, exceeding the trading volume of Bakkt bitcoin options.
So why is this big news? What impact does the introduction of derivatives such as options have on the currency circle?
First of all, it is a brand new choice for investors.
Option is a kind of derivative with lower cost, higher return and less risk. Compared with the spot, it does not need to spend a large price to obtain the ownership of the currency; compared with the contract, it will not appear "explosion" and other phenomena, causing large-scale losses to users. In other words, users in the currency circle have more choices when investing in Bitcoin.
Secondly, it is an opportunity for Bitcoin to rectify its name.
People in the currency circle will sneer at the sayings that "Bitcoin is CX" and "Bitcoin is a Ponzi scheme", but many people outside the circle are confused by the ups and downs of Bitcoin prices, and because they are frequently exposed. Warehouses, tens of thousands and hundreds of thousands of loss fears, so a series of misunderstandings have arisen. Large-scale exchanges and institutions launch formal trading platforms and various derivatives, which can make Bitcoin better understood and accepted by the public.
Again, a value-enhancing product for the cryptocurrency market.
Whether it is cryptocurrency or traditional finance, the derivatives market is a more imaginative space. The value of traditional financial derivatives ranges from tens of trillions to hundreds of trillions, while cryptocurrencies have a broad development path due to their short development time and low acceptance. The emergence of various derivatives not only attracts a large amount of funds from the outside, but also enhances the liquidity of funds within the currency circle.
Finally, it plays a purge role in the atmosphere of the cryptocurrency market.
From 2017 to 2019, counterfeit coins and model coins were rampant, and the country's vigorous rectification greatly improved the market environment. If formal derivatives are added to replace altcoins, the entire cryptocurrency market will be more compliant and develop in a benign direction.
Disclaimer: The information published in this article does not represent any investment suggestion of the company, nor does it constitute any investment advice. The picture is from the Internet. If there is any infringement, please contact to delete it. Please note the source for reprinting.
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Disclaimer: The information published in this article does not represent any investment suggestion of the company, nor does it constitute any investment advice. The picture is from the Internet. If there is any infringement, please contact to delete it. Please note the source for reprinting.
