The salient features of the planned Bakkt Bitcoin options contract include cash or physical settlement, capital efficiency, low fees, European-style options and also real-time messaging, options analytics and block trades.
The firm explained that a European style option contract limits the chances for early exit and minimizes operational difficulties.
The CEO Kelly Loeffler explained that the latest options product has been structured on the basis of client’s expectations and feedback. Loeffler further stated that it has been structured to gain exposure in Bitcoin or hedge risk.
Bakkt further elaborated about the regulatory aspects of options contract:
“ICE Futures U.S. has self-certified the contract with the CFTC and we’re excited to leverage the benchmark futures prices and institutional-grade custody to meet the needs for a regulated options contract.”
Bakkt CEO has further stated that the Bitcoin options contract will use Bakkt Monthly Bitcoin Futures contract as the basis for settlement. Bakkt Bitcoin Futures contract was launched on September 22.
In particular, Bakkt will levy a fee of $1.25 per options contract beginning January 2020 after rolling out options contracts with a fee waiver in December, Loeffler said.
Notably, the announcement has come a day after Bitcoin futures volumes on Bakkt recorded a new high of 452 BTC futures contracts. However, Bitcoin price fell sharply below $8,000 level, implying that the launch of the regulated platform has not created any bullish view so far on the cryptocurrency.
Earlier this month, the Intercontinental Exchange (ICE), which governs the New York Stock Exchange, transacted the first block trade offered via Bakkt Bitcoin futures contracts. Recently, Loeffler pointed out that the Bakkt Bitcoin options contract will offer block trades by making use of ICE Block.