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The second major security based on bitcoin is starting out to trade on the Chicago Mercantile Exchange.
The CHICAGO MERCANTILE EXCHANGE Group, one of the nation"s primary exchanges of options and futures ,made available bitcoin futures contracts for trading at 6 p.m. EST Sunday. The initial price for bitcoin futures contractss was $20,650, and the electronic currency was trading at $20,135 at 6:08 p.m. EST.
The digital currency has exploded in popularity and worth this year though drawing fears regarding its volatility.
The CME bitcoin futures, like the bitcoin futures that now trade on the Chicago Board Options Exchange, do not contain factual bitcoin. They will follow an index of bitcoin price. Each contract will be for 5 bitcoin.
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This one-sided speculative demand came to an end when the futures for bitcoin started trading on the CME on December 17.
Bitcoin futures are also a regulated financial product, which means that large institutional investors who are bound by right regulations are now able to bet on the price development of bitcoin by buying exchange-traded bitcoin futures. But their warnings contrast with moves like those of CME and and Cboe to start bitcoin futures trading. The Cboe futures went live on December 12 and the CME futures launched on December 17.
Trades are conducted on a leveraged basis with margins typically ranging from 1% to 80% of the underlying value of the financial instrument.