24 hours after Bakkt’s bitcoin futures platform registered a new all-time high for its bitcoin futures contracts, the platform announced today that it will be launching bitcoin options contracts for its bitcoin futures on December 9. Interestingly enough, Bakkt Options will go live before CME launches its bitcoin options after announcing last month.
Bitcoin Options By Bakkt To Go Live On December 9
According to a medium post, the Bitcoin Options contract will be launched owing to consumer feedback and is designed to give bitcoin exposure, generate substantial income and provide capital and cost efficiencies.
Bakkt’s parent company ICE has already received the go-ahead from the Commodity Futures Trading Commission (CFTC) and is leveraging its already-in-place bitcoin futures prices and institutional-grade custody solution.
“The Bakkt Bitcoin Options contract will be based on the benchmark Bakkt Monthly Bitcoin Futures contract and represents another important step in developing this asset class for institutional investors,” said Bakkt on Twitter.
The bitcoin options will start at a fee of $1.25 per contract in January 2020, where 1 contract represents 1 bitcoin. Additionally, customers will have the choice of having the options contracts settled either in cash or with actual bitcoin.
In addition, market participants can collaborate with fellow participants via the ICE chat instant messaging feature, thus, ensuring transparency and adherence to requirements.
After being launched on September 23, Bakkt Bitcoin Futures experienced a slow start leaving many wondering whether institutions are really interested in Bitcoin. However, after a few hiccups, the platform has seen increased volume.
Speaking about the performance of the bitcoin futures, Bakkt CEO Kelly Loeffler opined:
“Notably, we saw a record 590 contracts of Bakkt Bitcoin Monthly Futures change hands yesterday, October 23. We also completed a milestone with seamless physical deliveries in both our daily and monthly futures contracts.”
Bakkt Set To Beat CME To The Punch
In late September, Bakkt’s direct rival Chicago Mercantile Exchange (CME) announced that it will offer bitcoin options contracts on bitcoin futures in the first quarter of 2020. CME cited that the options were being launched based on client demand. These options will help traders mitigate risks of counterparty default with a central clearing as well as give traders an array of choices as it will support flexible trading.
CME had said in part:
“We believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk.”