Chicago-based trading behemoth CME Group has announced that XRP options are now officially live.
The same product has also been launched for Solana, another top 10 altcoin.
Earlier this year, CME Group launched regulated futures contracts on XRP and SOL.
The options on these futures were then announced in September to much fanfare.
How the options work
An options or futures contract gives the holder the right, but not the obligation, to buy or sell a certain futures contract at a specified strike price.
In this particular case, the option is based on a futures contract on XRP (or SOL).
The newly launched options are available in both standard and micro sizes. They will have daily, monthly, and quarterly expirations.
Obviously, there will be no physical token delivery since the underlying tokens are cash-settled.
The new option products will be used for spread strategies, volatility plays, income strategies, and so on.
Options are typically used for hedging purposes. For instance, if one goes long on XRP, they could use options to limit the potential downside risk that they could face.
More institutional adoption
Both XRP and SOL have made significant strides in terms of institutional adoption, gaining more legitimacy in the eyes of banks, asset managers, and other significant players. The launch of the new option products will certainly make them more attractive for institutional investments.
Institutional traders will be able to participate in sophisticated strategies that were outlined above. Meanwhile, retail investors will be able to gain fractional exposure with the help of the micro options.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team