Bakkt, the subsidiary of NYSE parent company Intercontinental Exchange (ICE) will be adding another bitcoin derivative product to its lineup of physically-settled bitcoin futures but this time it is an extension of the futures product.
Kelly Loeffler, the CEO of Bakkt made the announcement on Thursday writing in a blog post that Bakkt will be launching bitcoin options based on its monthly bitcoin futures contract.
However, unlike the futures contacts offered by the platform which are settled exclusively in the underlying asset, its forthcoming futures options will have the option to settle in either the underlying asset – which in this case is bitcoin – or be paid out in cash.
According to Loeffler, the new product will be launched this coming December on the 9th.
“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,” she wrote.
“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.”
Loeffler also mentioned in her post that the launch of the bitcoin futures options product was based on customer feedback.
When it launches in December, the Bakkt Bitcoin futures options will become the first of its kind bitcoin options derivative beating out Chicago-based CME which has also expressed its interest to launch its cash-settled bitcoin options based on its popular cash-settled bitcoin futures.
CME is planning to launch its derivatives product in the first quarter of next year. Bakkt managed to receive regulatory approval by self-certification through the CFTC as detailed by Loeffler saying that:
“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.”
The announcement comes a day after Bakkt bitcoin futures platform recorded the highest volume of contracts opened at 640 (worth in excess of $4.8 million) up more than 652% over the previous day volume of 85 contracts.
The increase in volume came on the same day on Wednesday when the price of bitcoin fell close to 10% in hours. This did not go unmentioned in the Thursday announcement. Loeffler said :
“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.”