Bitcoin Futures are here with the contracts available for trading on CBOE (Chicago Board Options Exchange) Futures Exchange LLC today.
According to TechCrunch, in just a minute of its launch, the price of a Bitcoin spiked about 10 percent from $14,700 all the way to $16,200, before finally settling to $15,500, up by about 5 percent.
The January Bitcoin Futures contract was last traded at $17,500, having touched an all-time high of $18,850 and a low of $15,460. So far, 2794 contracts of the January Futures have been traded.
In the February Futures, there were a total of 14 contracts were traded. The last traded price was at $18000, having touched a high of $19,140. The March contract was traded at $18000, having hit a high of $19,330.
At the time of publishing this report, a total of 50 March Bitcoin Futures contracts had been traded.
So, how do Bitcoin Futures work?
Just like the Futures market, a Bitcoin Futures contract is an agreement to buy or sell a particular commodity (in this case Bitcoins) at a predetermined price at a specified time in the future.
Futures contracts are standardised to facilitate trading on a futures exchange.
“In a futures market, if the price is $500/BTC, an investor needs to buy 50 futures contracts, each worth $10. If an investor wishes to open a positive position then he goes long with “buy" contracts, and if he decides to open a negative position, he goes short with “sell” contracts. An investor’s position can be either positive or negative for the same instrument.”
CBOE Futures Exchange, LLC (CFE) launched trading under the ticker symbol ‘XBT’.
As reported earlier that CBOE has partnered with Gemini Exchange, the Bitcoin exchange of the Winklevoss Brothers, for Bitcoin prices.
Furthermore, the final settlement value for XBT futures will be the official auction price (rounded to the nearest penny) for bitcoin determined at 4.00 pm Eastern Time on the final settlement date by the Gemini Exchange.
However, the exchange has put the following limits for buying and selling these contracts. Following are mentioned by CBOE:
- May not own or control more than 5,000 contracts net long or net short in all XBT futures contract expirations combined
- May not own or control more than 1,000 contracts net long or net short in the expiring XBT futures contract, commencing at the start of trading hours five business days prior to the Final Settlement Date of the expiring XBT futures contract
Both CME and Nasdaq also plan to introduce Bitcoin Futures.