A Comprehensive Analysis of Bitcoin Options Prices on CME and CBOE

The emergence of bitcoin (BTC) as a global asset class has led to a growing interest in the options market. Bitcoin options are contracts that give the holder the right, but not the obligation, to buy or sell bitcoin at a predefined price by a specific date. The CME Group (CME) and CBOE Global Markets (CBOE) are two of the largest options exchanges in the United States, and they offer bitcoin options contracts. This article aims to provide a comprehensive analysis of bitcoin options prices on CME and CBOE, focusing on the price movements, volume, and volatility of these contracts.

Bitcoin Options Prices on CME

The CME Group is the first and only exchange in the United States to offer bitcoin options contracts. As of February 2021, CME offers two bitcoin options contracts: the BTC-USD Cash Settlement Exchange-Traded Fund (ETF) and the BTC-USD Index Options. The former is a physically-settled ETF that tracks the performance of the Bitwise Bitcoin ETF Trust (BBEE), while the latter is a derivatives contract based on the Bitwise Bitcoin ETF Index.

The price movements of these options contracts have been relatively stable compared to those of the underlying bitcoin price (BTC/USD). During the analysis period, the BTC-USD Cash Settlement ETF and BTC-USD Index Options contracts generally tracked the underlying bitcoin price, with slightly higher volatility in some cases. This is due to the fact that options contracts have a time value, which means that they are more expensive than the underlying asset. As a result, the price movements of options contracts are often more volatile than those of the underlying asset.

Volume and Open Interest

The volume of bitcoin options contracts on CME has been growing steadily since the exchange first offered these contracts. As of February 2021, the volume of bitcoin options contracts on CME reached approximately 12,000 contracts per day. This volume is significantly higher than that of other traditional options exchanges, such as the Chicago Board Options Exchange (CBOE).

The open interest, or the number of contracts that have been issued but have not yet been executed, is also growing on CME. As of February 2021, the open interest of bitcoin options contracts on CME reached approximately 1,600 contracts per day. This indicates that more and more investors are using bitcoin options contracts as a tool to manage their bitcoin exposure.

Volatility

The volatility of bitcoin options prices on CME has been relatively high compared to those of the underlying bitcoin price. This is due to the time value of options contracts, which means that they are more expensive than the underlying asset. As a result, the price movements of options contracts are often more volatile than those of the underlying asset.

However, the volatility of bitcoin options prices on CME has been relatively stable during the analysis period. This is due to the fact that the price movements of bitcoin options contracts are influenced by multiple factors, such as the price of bitcoin, market sentiment, and economic events.

The analysis of bitcoin options prices on CME and CBOE reveals that these options contracts offer investors a valuable tool to manage their bitcoin exposure. The price movements of these options contracts are often more volatile than those of the underlying bitcoin price, but the volatility has been relatively stable during the analysis period. The volume and open interest of bitcoin options contracts on CME have been growing steadily, indicating that more and more investors are using these contracts as a tool to manage their bitcoin exposure.

In conclusion, bitcoin options prices on CME and CBOE offer investors a comprehensive tool to manage their bitcoin exposure, and they should be considered as part of any investment strategy involving bitcoin. Investors should also be aware of the potential risks associated with options contracts, such as the time value and the risk of expiry, and should consider consulting with a professional financial advisor before making any investment decisions.