Over the past two weeks, many bitcoin proponents have been focused on the upcoming bitcoin futures markets planned for the last quarter of the year. This week the Chicago Board Options Exchange (Cboe) released the firm’s bitcoin derivative contract specs for investors interested in this new trading vehicle. The author of the futures spec sheet, Cboe’s CFA Russell Rhoads, says he really doesn’t know how futures prices will affect bitcoin spot market prices.
The largest options exchange in the U.S., Cboe, is planning to launch its bitcoin futures products in Q4, alongside CME’s recent efforts to launch its products. Cboe swaps over $2B in annual contract trade volumes, and offers derivatives products for 2,200 companies, 140 ETFs, and 22 stock indices. Now, Cboe is dipping its toes into bitcoin’s trading waters by creating futures contracts utilizing a partnership with the bitcoin exchange, Gemini Trust Company, LLC. Two weeks ago Chris Concannon, Cboe’s President, and COO explained the firm is a “believer” in cryptocurrencies.
Cboe’s bitcoin futures specs detail the underlying ticker will be called “XBT,” and contract settlement values will be in XBTS. The firm explains products will have multiple contracts with several expiry cycles and also four serial expirations.
“The contract multiplier will be 1 so if a contract is trading at parity with bitcoin it will be worth about $7,900 based on current pricing — The minimum tick for a directional, non-spread trade is 10 points or $10, and a spread trade will have a much smaller tick of 0.01 bitcoin or $0.01,” details Cboe’s CFA Russell Rhoads.
The U.S. options exchange will operate trading hours between Sunday night at 5:00 pm to Friday afternoon at 3:15 pm Chicago time. Cboe will be offering extended trading hours for its bitcoin futures as well, and everything will be cash-settled based on the Gemini auction price for bitcoin in U.S. dollars. Rhoads also explains he is asked quite frequently, “How will the futures prices relate to spot bitcoin pricing?” Cboe’s CFA reveals he doesn’t know what will happen, stating;
The best (and most honest) answer I can give is, ‘I don’t know’ — I’ve done academic work on the launch of newly listed products in the past and prior assumptions about new markets often are off the mark.
“I’ve heard arguments for the futures trading at both a premium and a discount to the spot price, personally I think the best strategy is to see what the market tells us when bitcoin futures are available for trading,” Rhoads emphasizes.
Cboe will soon join the other firms like LedgerX and CME Group’s efforts to create a bitcoin futures environment. The Chicago Board Options Exchanges’ bitcoin futures specs were announced after CME revealed they made an error on the firm’s futures launch date. It’s possible Cboe may offer crypto-derivatives options before its competitor CME.
What do you think about Cboe’s futures specs? Are you looking forward to crypto-derivatives markets or do you want these market players to stay away from bitcoin? Let us know in the comments below.
Images via Pixabay, Cboe, and Linkedin.
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