CME Group, a leading derivatives exchange, has announced plans to roll out Ethereum options contracts.
Options and futures are types of derivative products that give traders another way to speculate on a particular asset. Futures contracts force holders to buy or sell an asset on a specific date; options contracts provide the same function but don’t force the holder to buy or sell (just the option to do so).
Ethereum options, therefore, give investors the ability to buy or sell the second-largest cryptocurrency by market capitalization at a specific future date.
The recent high volume of CME Group’s Ethereum futures product has been the primary reason to finally roll out options. The firm’s global head of equity and FX products Tim McCourt said that its Ethereum futures have “seen a 43% increase in average daily volume year over year."
The options product launch offers increased flexibility in the derivatives market for traders.
"The launch of our new Ether options contracts is particularly well-timed to provide the crypto community with another important tool to gain access to and manage exposure to ether,” said McCourt.
He also cited the upcoming merge event, slated for later this week, as one of the key reasons behind such high demand.
Ethereum merge around the corner
With the merge tentatively slated for September 14, Ethereum will undergo one of its most highly-anticipated updates since the network launched.
The update will see the Ethereum blockchain change from an energy-intensive, proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) mechanism. Of the various changes, the Ethereum Foundation has argued that the merge event will see the network use 99.95% less energy.
Speculators, miners, and various crypto firms are all prepping for the upgrade, with some even expecting a newly-forked version of Ethereum.
No matter the outcome, however, CME Group is clearly hedging all its bets.