May 03, · Hence, there are still significantly less avenues to trade it than the more adopted Bitcoin Futures contracts. At the time of writing, by far the most popular Bitcoin Options exchange is Deribit. Deribit currently offers 6 different expiry dates with 20 different strike prices for each. However, futures contracts offer ways for investors to make money off of movements in Bitcoin’s price without having to ever hold any Bitcoin directly. This can have a few benefits. One is that Bitcoin trading is currently unregulated or poorly regulated in many markets, but futures trading has much clearer rules surrounding it. Bitcoin Futures began trading on the CME using the underlying symbol BRR on December 18, Contract specifications are available on the CME website. Additional information on trading Bitcoin Futures with IBKR is available in our Knowledge Base.
When can i trade bitcoin futuresWhere Can You Trade Bitcoin Futures? - Phemex Blog
Related Articles. Bitcoin Bitcoin's Price History. Partner Links. The Commodity Exchange Act regulates commodities and futures trading in the U. It has been in force since What Are Look-Alike Contracts? Look-alike contracts are a derivative of a futures contract. What Is Against Actual Trading? Against actual is an exchange between commodities traders of a cash position in a certain commodity for a futures contract for the same commodity.
With this mechanism, you can profit from correctly betting that the price of Bitcoin will go up, which is called going long, or profit from correctly guessing that the price will go down, which is called going short. Note that the following is a general guide only.
Individual trading platforms may have variations on these systems. In its simplest terms, Bitcoin futures works by having you deposit some money into a Bitcoin futures exchange and buying Bitcoin futures with it.
Profits or losses will be realized when a futures contract is sold, or when it expires naturally. You will typically be able to keep track of your realized profits or realized losses on an ongoing basis, which shows an approximation of how much you would gain or lose if you were to sell a contract at the current time. Bitcoin perpetual futures contracts, or perpetual swaps, will typically track the spot price the current market price of Bitcoin. Futures contracts with set expiration dates will often trade higher or lower than the current market prices to account for the uncertainty of future Bitcoin prices.
Beyond speculation, futures trading can also be used as a risk management tool and a way of playing the market in more depth. Futures contracts can be used to multiply profits, mitigate risks and profit from falling prices.
They can also be a very quick way of losing money if you get liquidated, which can happen very quickly when using x leverage. Just like leverage can help you quickly make more money on correct bets, it can also be a very fast way of losing all your funds on incorrect bets. If the markets go the wrong way, you can lose you entire deposit. Different exchanges will often have different liquidation thresholds.
Some traditional trading platforms now offer Bitcoin futures, as do a number of dedicated cryptocurrency exchanges and forex trading platforms. These are used to facilitate trading during specific hours, in well-regulated, legitimate and largely transparent environments. All of the Bitcoin futures exchanges listed on this page are large, well-known and have a reputation for being legitimate.
Some are largely unregulated, while others such as CME are relatively tightly regulated. But to a certain extent, Bitcoin futures trading is always at least a bit dangerous given the volatility. Perpetual swaps are a type of futures contract created specifically for cryptocurrency.
As the name suggests, these contract types are indefinite without any set expiration date. How do futures contracts pay out? Depending on the contract, profits may be realized in either Bitcoin or the fiat currency equivalent.
Andrew Munro is the cryptocurrency editor at Finder. Andrew has a Bachelor of Arts from the University of New South Wales, and has written guides about everything from industrial pigments to cosmetic surgery. Bitcoin continues to push upwards, leaving gold in the dust as investor sentiment shifts towards digital currencies.
They are a relatively small exchange that is based in Amsterdam. They are also unique as they are one of the only exchanges that list standardized Bitcoin options. Although the volumes are relatively thin and the option notionals are on the lower end, their option order books should be sufficient for most traders. However, unlike with the physical product, there are a number of different options contracts with corresponding order books.
Below is the order form for a Bitcoin Option on Deribit. As you can see, you can select the three different inputs in the top left circled.
You can see the order books that are currently open for this particular option to the right of that. In this case, you are placing an order for the price of the option itself. If you adjust any of the option parameters then you will be taken to a new order book. You may notice that the further away that you take the strike away from the current price, the market may become a bit illiquid. If you are a more advanced option trader then you can also place orders based on more specific criteria.
Apart from merely being able to protect portfolios or placing a one-way bet on the price, there a whole host of option strategies that you can employ. These strategies are used extensively in established option markets and allow the trader to maximize their returns merely based on the underlying volatility in the asset. As Bitcoin faces more Wall Street adoption, you can be certain that portfolio managers will be looking for alternative ways to optimize their portfolios.
I would not be surprised if a thriving Bitcoin option market were to crop up in the next years. Featured Image via Fotolia Build a winning crypto portfolio Free report teaches how to structure your crypto portfolio, so you can maximize gains and minimize losses.