Chicago Mercantile Exchange (CME) experienced a 24% rise in crypto options trading volume in July, reaching $940 million, according to CCData. Institutions' use of options for possible hedging may have contributed to the growth.
According to a report published by CoinDesk, CME's double-digit growth in crypto options trading volume signifies an increased interest in hedging tools among investors. Bitcoin (BTC) options volume rose by 16.6% to $734 million, while ether (ETH) options saw a significant 60% increase to $207 million. CCData suggests that the increased BTC options volume could indicate that institutions are using options to hedge their positions amid market uncertainties.
Options are derivative contracts giving the buyer the right to purchase or sell an underlying asset at a predetermined price on or before a specific date. Call options grant the right to buy, while put options provide the right to sell.
CME's options enable the buyer to buy or sell one cryptocurrency futures contract at a specified price on a future date. The exchange provides bitcoin and ether options based on its cash-settled standard and micro BTC and ETH futures contracts. Standard contracts are set at 5 BTC and 50 ETH, while micro contracts are measured at one-tenth of 1 BTC and one-tenth of 1 ETH.
Despite the surge in options trading, CME BTC and ETH futures activity experienced a slowdown, with futures volume declining by 17.6% to $39.1 billion. Total derivatives trading volume (futures and options) dropped by 17.0% to $40.1 billion, as reported by CCData. Additionally, the centralised crypto spot and derivatives trading volume fell by 12% to $2.36 trillion in July, marking the second-lowest combined volume since December 2020.