Bakkt, is all set to launch first regulated options contracts for Bitcoin futures on the 9th of December. The options contract will be based on the Bakkt Monthly Bitcoin Futures contract. Interestingly, options will be available on Bakkt platform a month before the launch of options on the Chicago Mercantile Exchange.
Options Contract Offers Attractive Fees and Benefits
The new contract has been designed as per customer feedback and has been designed to hedge or gain bitcoin exposure, generate income, and offer cost and capital efficiencies. Furthermore, ICE Futures U.S. has self-certified the contract with the CFTC and claims to leverage the futures prices and institutional-grade custody in order to meet the demands of a regulated options contract.
The fees has been set at $1.25 per options contract where 1 contract is 1 Bitcoin. Also, the contracts will be margined contracts and the platform will allow for cross-margining with underlying features contract. The options will settle into Bakkt’s monthly Bitcoin futures contract with options of closeout positions or taking physical delivery. The design of the contract has been made such that it helps avoid early exercise and also reduces operational burdens.
Furthermore, market participants can collaborate with other market participants using the ICE chat feature. Thus, ensuring support for compliance requirements. Also, participants will have access to more trading opportunities by leveraging the ICE block. Furthermore, users have the benefit of using ICE Options Analytics to support options valuation, analysis and risk management.
CME To offer Options on Bitcoin Futures in early 2020
The previous month saw rival exchange CME Group announced the launch of options on Bitcoin Futures. CME futures are set to launch in early 2020 and are being launched on popular customer demand. The options on CME futures will further help traders mitigate possible risks of counterparty default with a central clearing. Also, they will give rise to wider variety of choices for traders and help them in managing risk and building strategies, by supporting flexible trading.
Will Bakkt launch of options put at it par with the Chicago Mercantil Exchange? Let us know, what you think in the comments below!