Strikes and listings for Micro Cryptocurrency options

Options market participants must decide which time periods and price levels best suit their trading strategies. These are referred to as the option’s expiration date and strike price. When trading options on Micro Bitcoin and Micro Ether futures at CME Group, traders have the flexibility to choose between different contract expirations and strike prices.

First, let’s look at the listing cycle of options that are available to trade on Micro Bitcoin and Micro Ether futures.  At any given time, the nearest two consecutive monthly option expirations will be available.  These monthly options will derive their value from the corresponding monthly Micro Cryptocurrency futures contract and expire on the last Friday of the contract month.

Let’s assume it is the beginning of May. The two consecutive monthly options listed are May and June.

When the May options expire, the July options contracts will be listed.  In addition to the monthly options, CME Group will list the four nearest Friday weekly options.  Again, using May as an example, each Friday of the month would have its own option expiration.  In this example, since the final Friday of the month corresponds to a monthly expiration, the 4th weekly Friday of the cycle would occur on the following Friday.

As the first week expires, the next Friday expiration in the series will be added.  Additional weekly Monday and Wednesday options contracts will also be available to trade.  For example, during the first week of trading in May, Monday and Wednesday option expirations will also be listed. Generally, there will only be one Monday and one Wednesday option listed at a time.  However, on the expiration date of these options, the subsequent Monday or Wednesday expiry will be made available. This allows mid-week position and risk management of cryptocurrency exposures. 

In most cases, the weekly options will derive their value from the corresponding monthly futures contract. In our example, the May weekly options would derive their value from the Micro futures contract expiring on the last Friday of May, while the June weekly options would follow the futures contract expiring at the June.

An option can never have an underlying futures contract that expires before the option. 

Let’s review the strike prices of options on Micro bitcoin and Micro Ether futures.  An option’s strike is the price at which a call owner can purchase, or a put owner can sell, the underlying futures contract.

Multiple strike prices will exist with the same expiration date. This set of strike prices is referred to as the strike range. The strike range extends above and below the current futures price so that risk can be managed whether the futures price increases or decreases.

The listing procedure for Micro Ether and Micro Bitcoin strikes ensures that strike granularity is appropriate for a variety of price or volatility conditions and will vary based on the respective underlying futures price. Dependent upon the futures price or expiry, strike intervals will be available at increments which are appropriate to the current price of the underlying coin. 

As the futures prices increase, intervals become wider. If prices decrease, intervals will become narrower. Options with less time to expiration will have more granular strikes to allow for greater precision when hedging or expressing a view. 

CME Group will manage the listings daily to ensure that appropriate instruments are available. 

Once a strike price is added, it will remain available for trading until expiry, and will not be removed based on the price movement of underlying futures contract.  Market participants can see the available strike prices via CME Globex. 

The variety of strike listings and expirations available for CME Group options on Micro Bitcoin and Ether futures provides greater precision, versatility, and more options for your cryptocurrency trading strategies.