Deribit announced in the week it might begin offering daily bitcoin index options Feb. 3. Scheduled a day at 08:00 UTC, users are going to be ready to begin trading options at a strike price of $125. Contracts expire two days after being listed.
The exchange will attempt to offer contracts that move within a 5 percent range around at-the-money (ATM) levels, Deribit’s post said. The news gives traders a way wider range of expiry dates, and therefore the platform will now have contracts that expire a day .
“These short-dated expiries are specifically interesting for investors and traders with a short-term view supported for instance macroeconomic data or events,” the post reads. Deribit’s chief communication officer, Luuk Strijers, told CoinDesk the exchange had introduced daily options in response to “market demand.”
Launching in 2016, Deribit dominates the cryptocurrency options market. Data from analytics firm Skew shows Deribit options made up nearly 90 percent – approximately $50 million worth – of the entire volume traded on Tuesday. as compared , regulated platform Bakkt made no trades and CME option contracts made up approximately 2 percent of the trading volume.
Regulated bitcoin options have only begun trading within the past few months. Bakkt launched options trading just before the vacation season and CME followed suit, launching its options contracts earlier in January. OKEx launched unregulated options contracts on Dec. 26.
The data shows Deribit has remained in position and, because the graph below shows, had a record month for volume in December. But the monthly market share has also decreased, falling approximately 10 percent in January.
That coincides with rival options exchanges experiencing month-on-month increases in combined trading volume. Predominantly this appears to be coming from OKEx and CME, as Bakkt reported zero volume on its own platform last week.
Emmanuel Goh, co-founder and CEO of Skew, said he wasn’t surprised Deribit’s market share was falling to new competitors. The exchange had the first-mover advantage but that was always getting to decrease as other companies entered the space. “Market share falls once you add more exchanges into the combination ,” he said.
OKEx has been ready to quickly storm into second place because it’s been ready to offer new products to its existing client base in Asia. consistent with Goh, what’s important is that “the pie remains growing,” with Deribit’s volumes rising as a part of a way larger increase within the broader crypto options market.
But the introduction of daily options could make Deribit more competitive. Mati Greenspan, the founding father of analyst firm Quantum Economics, said adding new products usually helps an exchange broaden its potential client base.
“Every client is exclusive and can have different trading styles, strategies and demands from their broker. So having more products helps the provider to satisfy more customers. an honest broker will have a bent to know their clients’ needs and can take them under consideration when creating new products and services,” he said.
Like in traditional markets, Strijers said Deribit expects daily options will take up a “sizable percentage of volumes.” With increasing volatility in January 2020, he added, “We again see significant month-on-month growth and only expect further growth thanks to the expansion of tradable options.”