Crypto options volume on CME rose to nearly $1B in July: CCData
|Derivatives giant Chicago Mercantile Exchange (CME) recorded double-digit growth in crypto options trading volume in July, helped by investor appetite for hedging tools.
Trading activity rose 24% to $940 million, registering the first increase in four months, according to data tracked by CCData. Volumes in bitcoin (BTC) options rose 16.6% to $734 million, while ether (ETH) options registered a 60% increase to $207 million.
"The increase in BTC options volume on the CME suggests that institutions might be hedging their positions with options as uncertainty remains in the market," CCData said in a report shared with CoinDesk.
Options are derivative contracts that give the purchaser the right to buy or sell the underlying asset at a predetermined price on or before a specific date. A call option gives the right to buy and a put option confers the right to sell.
CME's options give the buyer of the call/put the right to buy/sell one cryptocurrency futures contract at a specific price at some future date. CME offers Bitcoin and ether options based on the exchange's cash-settled standard and micro BTC and ETH futures contracts. Standard contracts are sized at 5 BTC and 50 ETH. The micro ones are one-tenth of 1 BTC and one-tenth of 1 ETH.
Customer business in the options segment picked up in July for the first in four months. (CCData) (CCData)
Bitcoin and ether fell by 4% in July as optimism from the potential launch of bitcoin-spot ETF faded and regulatory uncertainty and DeFi hacks roiled sentiment. Bitcoin traded alongside stocks and gold a little more than it did in the second half of June, warranting the use of options to hedge directional exposure in the crypto market.
The combined activity in CME BTC and ETH futures cooled in line with the global slowdown. Futures volume on CME registered a 17.6% decline to $39.1 billion, while total derivatives trading volume (futures and options) fell 17.0% to $40.1 billion, according to CCData.
The combined crypto spot and derivatives trading volume on centralized slipped 12% in July to $2.36 trillion. "This was the second-lowest combined volume on centralised exchanges since December 2020, only eclipsed only by December 2022," CCData noted.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.