Over the last few weeks, many bitcoin enthusiasts have welcomed the news of possible bitcoin futures markets. Recently the Chicago Board Options (CBOE) launched its bitcoin derivative contract specifics, giving hope for all investors who are interested in the new trading vehicle.
Being the US largest options exchange, CBOE said that its plan to launch the bitcoin futures products will happen in the fourth quarter. This move follows a number of other financial institutions which have also hinted about introducing Bitcoin futures as well.
CBOE to Use XBT Ticker for the New Products
According to the Chicago Board Options Exchange, its products will use the XBT ticker, a similar one being used by Kraken – another bitcoin exchange. There are also expectations that the company will also introduce other types of contracts in a bid to get a bigger share of the market quickly.
“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,” says Russell Rhoads – the CFA of Cboe.
CBOE swaps more than $2 billion in its contract trade volumes annually, offering a good number of derivative products for about 2,200 companies, 22 stock indices and 140 ETFs.
Increasing Demand for Financial Products that are Based on Bitcoin
There’s a notable increase in the demand of financial products that are bitcoin-based because of the surge of value of several cryptocurrencies, with some financial institutions taking a turnaround on their bitcoin assessment. Goldman Sachs, for instance, advises its investors to adopt bitcoin and not ignore it anymore, after previously criticizing the digital currency.
This increasing demand for bitcoin derivatives and futures is seen to result in high competition among all industry players. The competition is expected to be tough, especially with the entry of CBOE, considering that the firm is the biggest exchange of its kind in the United States.
To compete effectively, however, there are some issues that CBOE needs to resolve, among them being how to relate the contracts it offers to spot the pricing of bitcoin.