Bakkt Announces First Bitcoin Regulated Options Contract
By Jamie Green – Cryptocurrency Investor
On Oct. 24th, Bakkt announced that it will be launching its first regulated futures options contract for Bitcoin on Dec. 9. This is to bring greater trust to the market for those that buy and sell Bitcoin or who are yet to invest.
Per the Bitcoin futures exchange, the main features of the Bakkt Bitcoin Options contract include cash or physical payment, capital efficiency, low fees, European-style options, block trades, options analytics and instant messaging. All these features aim to provide a comprehensive experience buying and selling Bitcoin futures.
The firm notes that a European-style option is a contract that restricts the opportunity for early execution to decrease operational burdens. CEO Kelly Loeffler explains that the new options product is based on customer feedback and is made specifically to hedge or gain Bitcoin exposure.
“ICE Futures U.S. has self-certified the contract with the CFTC and we’re excited to leverage the benchmark futures prices and institutional-grade custody to meet the needs for a regulated options contract.”
Loeffler noted that the Bakkt Bitcoin Options contract will be based on the Bakkt Monthly Bitcoin Futures contract, which is a major Bitcoin futures contract that launched on Sept. 22 along with Bakkt Daily Bitcoin Futures. This means users buying Bitcoin options from Bakkt will directly affect the futures contract.
Starting January 2020, Bakkt will be charging $1.25 per options contract after introducing the options with the fee waiver in December.
This piece of news came a day after Bakkt’s Bitcoin futures volumes hit a new all-time high with 452 BTC futures contracts. The Bitcoin price was also reported to crash by $500 five minutes after trading around the $8,000 threshold last week as many looked to sell Bitcoin. This drop in price directly affect the markets in the Bakkt exchange.
The Intercontinental Exchange (ICE) in early October executed the first block trade of Bakkt Bitcoin futures contracts. It is rumoured that the Bakkt Bitcoin options contract will feature block trades utilising the ICE block.
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