CME to Introduce Ether Options Contracts

Chicago-based derivatives exchange CME Group said Thursday that it would introduce options on Ether futures on September 12 pending regulatory approval. According to CME, these new contracts will yield one Ether futures, scaled at 50 Ether per contract, based on the CME CF Ether-Dollar Reference Rate, which serves as a daily reference rate for the price of Ether in U.S. dollars.

The Ether options products will augment the existing suite of crypto options contracts offered by CME Group, which now includes Bitcoin options and micro-sized Bitcoin and Ether options.

CME Group’s Global Head of Equity and FX Products, Tim McCourt, said, “The introduction of these new options contracts builds on the extraordinary growth and deep liquidity we have witnessed in our current Ether futures, which have traded more than 1.8 million contracts to date.”

McCourt said that as the crypto sector nears the much expected Ethereum Merge next month, market participants are increasingly turning to CME to manage Ether price risk. The introduction of the new options is backed by market players who want to provide their clients a broader range of hedging alternatives inside the crypto market.

Sam Newman, Digital Assets Head of Brokering at TP ICAP, said, “With the imminent Ethereum protocol merging, we anticipate tremendous interest from both our conventional customers and crypto native clients in this new contract.”

Ryan Duckworth, head of trading at US-based Akuna Capital Head of Trading, said, “As the demand for crypto derivatives rises, we look forward to providing liquidity to enable clients to hedge risk and manage Ether exposure.”

CME reported that its standard-sized and micro-sized Ether futures contracts have seen significant growth and continue to provide stable client liquidity, volume, and open interest.
The company recorded record daily levels of Ether futures trading in July, with second-quarter trading volumes increasing by 27% compared to the first quarter. The most recent launch attempts to increase CME Group’s portfolio of bitcoin derivatives.

CME released Bitcoin Euro and Ether Euro futures at the beginning of this month. In March, the company introduced futures contracts for Micro Bitcoin and Micro Ether. Such product introductions are a part of CME’s efforts to give a wide spectrum of market participants — from institutions to active, skilled traders — with more flexibility and accuracy to manage their exposure to the two largest cryptocurrencies by market capitalization.

The development of a robust market for institutions and sophisticated investors desiring crypto exposure in a regulated setting is facilitated by the availability of such a diverse array of global goods. The smaller contract sizes allow investors and traders to participate in crypto markets with greater flexibility and at a lower initial cost, while also making the market accessible to new participants.