Bitcoin Options Trading at CME Surged to New Highs in Halving Week

Investor interest in bitcoin options listed on the Chicago Mercantile Exchange (CME) peaked to record highs in the days after the recent halving event.

Bitcoin underwent its much-anticipated reward halving on Monday, at which point the reward per block mined was reduced from 12.5 to 6.25 BTC.

On the same day, daily options trading volume on the CME jumped to $17 million, surpassing the lifetime high of $9.9 million set on May 6, according to data provided by crypto derivatives research firm Skew. Notably, volume has continued to grow ever since.

Source: Skew

On Tuesday, the CME set a new record of $30 million, which was smashed on the following day with a total tally of $40 million. The exchange recorded volume of $36 million on Thursday, marking a 2,000% rise from the volume of $1.7 million registered a week ago.

Volume refers to the number of contacts traded during a specific period. Options are derivative contracts that give the purchaser the right to buy or sell the underlying asset at a predetermined price on or before the specified date. A call option represents a right to buy, and a put option represents a right to sell.

CME has also recorded an over 270% rise in open interest over the last seven days.

skew_total_btc_options_open_interest-3
Source: Skew

Open interest, or the number of outstanding positions at a given point of time, hit consecutive record highs on Tuesday, Wednesday and Thursday. The exchange closed trading on Thursday with $142 million worth of open positions.

The surge in both volumes and open interest represents increased institutional participation. “Options are one product that attract sophisticated traders,” Skew’s CEO Emmanuel Goh said at Consensus: Distributed on Thursday.

Sophisticated traders or institutions usually take positions in options to hedge their positions in the spot or futures market. For instance, prominent trading firms held long positions in the spot market and bought put options (bearish bets) to protect against a sudden downside move in…

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