“As market participants anticipate the upcoming Ethereum Merge, a potentially game-changing update of one of the largest cryptocurrency networks, interest in Ether derivatives is surging.”
CME Group has launched options on Ether futures as planned. Each Ether futures contract is sized at 50 ether per contract and is based on the CME CF Ether-Dollar Reference Rate, which serves as a once-a-day reference rate of the U.S. dollar price of ether.
The derivatives marketplace said last month CME’s Ether options were being reviewed by regulators and the exchange operator was only awaiting approval before bringing the new product to market.
These new contracts will also expand CME Group’s existing suite of Cryptocurrency options contracts, which include Bitcoin options, as well as micro-sized Bitcoin and Ether options.
Interest in Ether derivatives is surging amid Ethereum Marge
Tim McCourt, Global Head of Equity and FX Products, CME Group, said: “As market participants anticipate the upcoming Ethereum Merge, a potentially game-changing update of one of the largest cryptocurrency networks, interest in Ether derivatives is surging. The launch of our new Ether options contracts is particularly well-timed to provide the crypto community with another important tool to gain access to and manage exposure to ether. Our new options contracts will also complement CME Group’s Ether futures which have seen a 43% increase in average daily volume year over year.”
Rob Strebel, Head of Relationship Management for DRW, commented: “Options are an essential part of the trading strategy deployed by Cumberland’s institutional counterparties, whether that’s to hedge risk or gain exposure to the asset class without having it on their balance sheets. CME Group has proven trading and clearing infrastructure backing the product and we’re excited to provide liquidity on day one. As ether transitions through the anticipated merge this week, we expect we’ll continue to see strong demand for this Ether options contract.”
Leon Marshall, Global Head of Sales at Genesis, added: “Genesis is proud to consistently provide day-one support of CME Group’s ever-expanding suite of crypto derivatives and offer the newest derivatives products to our institutional clients. The launch of the new Ether options contract ahead of the highly anticipated Ethereum Merge provides our clients with greater flexibility to trade and hedge their Ether price risk.”
Both futures and options are a way for investors to bet on the trends of a cryptocurrency price without having to actually hold the underlying coin, which skirts regulatory and custodian issues.
However, futures are, in general, riskier than options as the only financial liability for the latter is the premium paid at the purchase time. On the other hand, futures contracts involve maximum liability.
