Aug 18, 2022 - Economy & Business

CME Group to offer Ethereum options trading ahead of The Merge

Illustration of the Ethereum logo peeking out from behind a curtain.
Illustration: Victoria Ellis/Axios

CME Group said on Thursday that it is planning to roll out a new financial product just in time for Ethereum 2.0. The derivatives marketplace operator will launch options on ether (ETH) futures on Sept. 12, pending regulatory go-ahead.

What's happening: CME Group is stepping up its presence in crypto derivatives trading with the new offering in anticipation of what stands to be a major market-moving event — Ethereum's long-awaited move to proof-of-stake.

Be smart: Options give holders the right (not the obligation) to buy or sell a futures contract at a specified strike price for a particular time (options come with an expiration date).

  • So an ether futures trader expecting futures to go higher would buy an ether call option and an ether futures trader expecting futures prices to fall would buy a put option.

Details: These contracts deliver one ether futures sized at 50 ether per contract based on the once-a-day reference rate of the U.S. dollar price of ether per the CME CF benchmark.

  • CME Group also offers options and micro-futures on the world's largest digital asset; the firm rolled out in March micro-bitcoin and micro-ether options.
  • The size of the options or 1/10th of their respective underlying tokens in size were billed as a product that would allow broad market participation, from big institutions to individual traders.
  • CME also has plans to launch bitcoin euro and ether euro features on Aug. 29 pending regulatory review.

Big picture: CME Group previously competed with Chicago-based competitor Cboe Global Markets, which was the first exchange to list bitcoin futures in 2017 before exiting the market in 2019.

What they're saying: "Our new ether options will offer a wide array of clients greater flexibility and added precision to manage their ether exposure ahead of market moving events," said Tim McCourt, Global Head of Equity and FX Products, CME Group, in a statement.

Go deeper