Malta-established cryptocurrency market OKEx has established Bitcoin (BTC) options trading for a selection of dealers before a public launching in January 2020.
Diversifying hedging approaches for crypto traders
As a favorite derivative that allows dealers to hedge against asset price swings in either way, an options contract stipulates the opportunity to buy either a right to buy (a call option) or sell (a put option) a specified asset at a predetermined”strike price” This attack price is decided by or before the contract’s expiration date.
Based on OKEx, its Bitcoin alternatives contract will be dependent upon the Black-Scholes pricing model — a grading algorithm that’s become the foundation for the pricing model of alternatives on conventional assets because the early 1970s. The contract will utilize real time information and is supposedly being released as part of a revamp of this platform’s whole trading infrastructure.
The debut of choices alongside present margin trading, futures and endless swaps markets will increase the hedging and trading strategies available to OKEx consumers, the trade asserts. In a statement, Lennix Lai, financial marketplace manager of OKEx, stated:
“Options are a unique instrument that enables traders to manage, price and hedge the volatility of crypto assets […] to take advantage of more than just market direction. We welcome clients from different segments, especially from our institutional clients, who have shown the fastest-growing demand in derivatives trading, especially on futures and perpetual swaps.”
After its limited preliminary accessibility, the new alternatives contract will probably open to public access on Jan. 9, 2020.
Exchanges expect solid uptake to get crypto-based Choices
As mentioned, the Chicago Mercantile Exchange (CME) Group has indicated it hopes to see large demand in Asia because of its planned forthcoming Bitcoin choices merchandise.
Tim McCourt, CME Group’s worldwide head of equity indicator and other investment products, has noticed that unlike futures which provide traders a”one-for-one exposure” — choices have the benefit of supplying downside protection, or upside down exposure at a fraction of the inherent cost.
Back in November, OKEx established Bitcoin futures contracts margined together with all the Tether (USDT) stablecoin, also apparently intends to establish similar contracts for additional crypto assets, such as EOS, Ether (ETH), Litecoin (LTC), Bitcoin Cash (BCH), XRP and Tron (TRX).