After Futures Success: Huobi to Launch Bitcoin Options in Q3 2020

After a dominant run in the cryptocurrency derivatives space, Huobi announced today that it is planning to roll out Bitcoin Options trading on its platform sometime this quarter.

Bitcoin Options are derivative products that give the trader the right, but not the obligation, to buy or sell Bitcoin at a specific price at a certain date of expiry. Unlike Bitcoin Futures where traders are contractually mandated to buy the bitcoin they pledged to, Options traders have the option to choose whether or not they will buy the BTC.

Adding Options to its existing pool of offerings is set to increase Huobi’s growing market dominance with major competitors like Binance, BitMEX, and OKEx all trailing in terms of trading volume in recent weeks. In the last 24-hours too, Huobi topped the ranking for bitcoin futures products, settling $1.86 billion worth of trades.

Huobi BTC Futures

Huobi BTC Futures 24-hour Volume (Source: Skew)

Regarding the nature of the planned Bitcoin Options by Huobi, the exchange revealed that the product would be offered in European style, which means that the buyer of the Option can only be exercised at the expiration.

Additionally, while competitors require that investors hold a 1 BTC balance or slightly lower to open Options positions, Huobi will lower the entry barrier by allowing low minimum positions of 0.001 BTC (appr. $10) and at the same time charge basic delivery and trading fees. Initially, the Options offering by Huobi will only be for Bitcoin, with support for other cryptocurrencies likely to come down the line.

Alpha-testing for the product has already begun with the full roll-out for institutional and individual investors expected as soon as the testing phase is complete.

In March, Coinfomania reported that in the aftermath of the market crash, Huobi introduced a new “partial” liquidation mechanism (circuit-breaker) that systemically minimizes a trader’s exposure in the event of severe market volatility.