Posted 2 years ago | by Ben Armstrong
Bitcoin Options Trading Is Launched By Crypto Derivatives Exchange FTX
On Jan 12, Sam Bankman-Fried, FTX CEO, Tweeted that FTX is launching options trading for the Bitcoin market. He claims that the Bitcoin options trading feature went live on FTX exchange and hit $1 million in volume after the first two hours of trade.
With the addition of this features for the cryptocurrency space, FTX is likely more interesting for traders and may climb higher in the ranks of popular exchanges.
FTX was established in early 2019, and it provides professional derivative trading products. It offers quarterly and perpetual contracts on various crypto assets, leveraged tokens and over-the-counter (OTC) services.
FTX is Building an Options Platform
FTX received support from Binance to launch its options platform. Binance is one of the giants in crypto space. In Dec 2019, it was reported that Binance invested tens of millions in crypto derivatives platform FTX.
FTX’s announcement does not specify which crypto assets are supported by the options market just launched on the platform. For the moment, there are only options which are based on Bitcoin on the website.
Options trading is the new popular product in the crypto space, and many exchanges are adding options to their offerings. The hub of institutional trading, the Chicago Mercantile Exchange, or CME, was one of the first to launch a Bitcoin Futures contracts back in 2017.
A Popular Option
Many exchanges have followed the CME, and launched options contracts on Bitcoin. The CME plans to launch an options trading feature for Bitcoin, which is scheduled on January 13, 2020.
According to J. P. Morgan Chase’s executives, these new options are “highly anticipated” due to “unusually strong activity.”
Cryptocurrency derivatives are a sign of a maturing market. OKEx, a Malta-based cryptocurrency exchange, announced that it will launch crypto options trading at the end of last month. In mid-December, Napoleon AM, a Paris-based asset management firm, also announced the launch of a regulated Bitcoin fund.
Options allow a person to lock in a price for a given financial instrument, in the anticipation that the price will either rise or fall from that level. In addition to speculation, options can also be used for commercial hedging. Many large companies use futures and options to insulate themselves from market volatility.
Given how volatile the Bitcoin market can be, the advent of easily traded options should help more organizations accept crypto payments.