The bitcoin derivatives market has seen some astonishing demand this year with the trading volumes soaring all-time highs. The derivative market that primarily dominated by futures contracts; however, there has been a recent surge in demand for options as well, which has forced significant players in the field to take notice and launch a product of their own. The latest exchange to dive into the Options game is Huobi, which is primarily known for spot and futures trading.
Huobi announced its plans to launch the bitcoin options contracts by the third quarter of this year. The firm believed to be working on adding new derivatives instruments on its futures platform. Huobi's interest in Bitcoin options is understandable given its is one of the largest derivative platforms with second-highest bitcoin futures trading volume on its platform. The platform is known for making bitcoin perpetual contracts mainstream.
The exchange, when enquired for its plan in the options market, states bitcoin options aren't much different than futures. The only significant difference being that the contract holder has no obligation to buy the underlying asset once it reaches the maturity period, the contract holder can pay a pre-decided premium fee instead.
Bitcoin Options Demand at an All-Time-High
The current leaders in the bitcoin options market CME Group reported that the demand for its bitcoin options contracts has skyrocketed and has soared by ten times. Derbit is currently the market leader with over 80% market dominance.
Huobi confirmed that its upcoming futures contract would be set up in a European-style, where the buyer of the contract can only be executed when it reaches its maturity period. The exchange, in its official announcement, said.
As per the reports, the contracts are currently in its alpha testing phase, and once completed, it would be an addition to the mobile trading platform, and later an official launch will be done for the Web and API.
“Huobi also offers incredibly low minimum positions of 0.001 BTC. This means that traders can open an Options position with around $10 compared to other exchanges where the minimum position can cost as much as 1 BTC.”