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CME Group to launch ETH futures options ahead of the upcoming Merge

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(Kitco News) - The CME Group is pushing further into the crypto derivatives market, revealing that it intends to launch options trading for Ether (ETH) futures beginning Sept. 12.

According to Thursday’s announcement, following a regulatory review, the world’s largest derivatives exchange plans to launch options contracts for its Ether futures, “sized at 50 ether per contract, and based on the CME CF Ether-Dollar Reference Rate, which serves as a once-a-day reference rate of the U.S. dollar price of Ether.”

The new Ether options will join the CME Group’s existing crypto options products, including its original Bitcoin (BTC) futures contract launched in December 2017, Bitcoin options trading products launched in January 2020, and “micro-sized Bitcoin and Ether options” that were launched in March 2022.

According to Tim McCourt, Global Head of Equity and FX Products at CME Group, “The launch of these new options contracts builds on the significant growth and deep liquidity we have seen in our existing Ether futures, which have traded more than 1.8 million contracts to date.”

The upcoming Ethereum Merge, predicted to occur on September 15, was also cited by McCourt as part of the motivation behind the new product launch.

“As we approach the highly anticipated Ethereum Merge next month, we continue to see market participants turn to CME Group to manage ether price risk. 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,” McCourt said.

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Buzz surrounding the Merge has been building over the past couple of months following the successful transition to proof-of-stake on several Ethereum testnets. This has led to an increase in the price of Ether along with an increase in demand for Ether options.

According to McCourt, 78% of the open interest in micro Ether options is in the September and December contracts, which suggests that traders have already begun to hedge their risk near the proposed merge date.

Between June and July, the CME Group reported a 7% increase in the average daily trading volume for Ether futures along with a 41% increase in the same volume of contracts of micro Ether futures.

The expectation of an increase in demand for Ether option products following the Merge was reiterated by Sam Newman, Digital Assets Head of Brokering at TP ICAP Group PLC, who noted that this “larger-sized Ether option, in tandem with the already popular Micro Ether option, has been eagerly awaited by TP ICAP's customers.”

"With the upcoming Ethereum protocol merge, we expect this new contract to see significant interest from both our traditional customers as well as crypto native clients,” Newman said.


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