Based on a report from Bakkt CEO Kelly Leofflet, on theDecember 9, Bakkt will launch the first regulated options contract for bitcoin futures. In her own words, per her medium post/press release:
” We’re committed to bringing trust and utility to digital assets and the options contract is an example of the many products we’re developing for regulated markets. The Bakkt Bitcoin Options contract will be based on the benchmark Bakkt Monthly Bitcoin Futures contract and represents another important step in developing this asset class for institutional investors, their customers and investors.
The new contract is based on customer feedback and is designed to hedge or gain bitcoin exposure, generate income, and offer cost and capital efficiencies. 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.
Key features of the Bakkt Bitcoin Options contract include:
· Capital efficiency: Margined contracts, and cross-margining with the underlying futures contract
· Cash or physical settlement: Options will settle into Bakkt’s monthly bitcoin futures contract with time to roll, close out positions or take physical delivery
· European style option: This contract design avoids early exercise and reduces operational burdens
· Attractive fees: $1.25 per options contract (1 contract = 1 bitcoin) starting in January 2020, following the fee waiver in December 2019
· Broad distribution and liquidity: ICE Futures U.S. markets are accessible globally and have dedicated market makers to support liquidity
· Instant Messaging: Collaborate with other market participants using ICE Chat, which can be tailored to support your compliance requirements
· Block trades: Access more trading opportunities as block trades by leveraging ICE Block
· Options analytics: Use ICE Option Analytics to support options valuation, analysis and risk management
Since launching the Bakkt Bitcoin Futures just one month ago, we’ve been working closely with market participants to build liquidity, create market transparency and build open interest. Notably, we saw a record 590 contracts of Bakkt Bitcoin Monthly Futures change hands yesterday, October 23. We also completed a milestone with seamless physical deliveries in both our daily and monthly bitcoin futures contracts.
Bakkt Bitcoin Futures have tight bid-ask spreads throughout U.S., European and Asian trading hours, and we continue to onboard new institutional and retail customers. If you’re interested in opening a Bakkt Warehouse account or trading the Bakkt Bitcoin Futures and Options contracts, we’d like to connect. Please email us at email@example.com for more information. “