CME Bitcoin Options are standardized financial derivatives traded on the Chicago Mercantile Exchange (CME) that grant the holder the right, but not the obligation, to buy or sell a specific quantity of Bitcoin futures at a predetermined price on or before a specified expiration date.
Mechanism
These options derive their value from the price of CME Bitcoin futures contracts, which are cash-settled against a Bitcoin reference rate. Trading occurs on a regulated exchange, ensuring centralized clearing and transparent price discovery, with strike prices and expiration dates set according to exchange specifications.
Methodology
Institutional investors leverage CME Bitcoin Options for a variety of strategic purposes, including hedging existing spot Bitcoin exposure, speculating on future price movements, or generating income through covered call or put-selling strategies, all within a regulated and transparent market structure.
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