How you can trade bitcoin futures (in the US)

When bitcoin futures began trading, Interactive Brokers clients looking to short the cryptocurrency quickly realized that the platform didn’t allow shorting of bitcoin futures*:

In fact, only three retail brokerages (available to the general public) seem to allow trading of the CBOE bitcoin futures at all.

When the futures officially opened for regular trading hours on Monday at 8:30am CT, the spread between trading a bitcoin future on CBOE’s platform and trading a bitcoin on GDAX (the trading platform backed by coinbase) was over $1,000. In a normal, orderly market, you could buy the GDAX bitcoin while selling the CBOE future and profit off of the spread (less some nominal costs). But of course, this is not a normal, orderly market.

The CME launches their futures contract this Sunday. With an initial margin rate of 35% and a contract size of five bitcoins, if bitcoin stays around $17,000, traders will still need to put up $29,750 just to play. Sorry Mom and Dad, but it doesn’t look like cryptocurrencies will be in your IRA anytime soon. Most retail investors who don’t want to put their trust in the nascent cryptocurrency exchanges will still have to wait for an ETF.

The following table is based on conversations with help representatives at the respective brokerages:

Brokerage Trades Futures? Trades Bitcoin Futures? Allows Shorting of Bitcoin Futures? Notes
TradeStation Yes Yes Yes
Interactive Brokers Yes Yes Yes
Advantage Futures Yes Yes Yes
Generic Trade Yes CME Only Yes Will not launch on CME launch date
Ally / MBTrading Yes CME Only Yes? See notes Margin requirements unclear
Lightspeed Yes Planned but not setup yet unclear
TD Ameritrade Yes No N/A
E*Trade Yes No N/A
Schwab Yes No N/A
Merrill Edge No N/A N/A
Fidelity No N/A N/A

* certain clients might now allowed to short bitcoin and/or bitcoin calendar spreads on Interactive Brokers

Bantix Adds Bitcoin Trading Analytics Capabilities to QuikStrike

 

FOR IMMEDIATE RELEASE

 

CHICAGO, IL, USA – 12 December 2017  Bantix Technologies, the industry leader in futures and options analytics, announced Tuesday that it will expand its trading analysis capabilities in QuikStrike to include cryptocurrencies. The new features will launch on December 17th, 2017 coinciding with the initial listing of bitcoin futures at the CME.

QuikStrike will now include the ability to chart futures and futures spreads data with plans to calculate realized volatility measures in the near future. Currently, both free and premium users have access to one week of the the Bitcoin Real Time Index (BRTI)* and one year, as data is generated, of the Bitcoin Reference Rate (BRR)*.

“We’ve always tried to be responsive to our customers’ needs in terms of data, functionality or new product additions,” says Nick Howard, founder and CEO of Bantix. “With the rise of the cryptocurrency market, we have a chance to address all three at the same time. Outside of our typical exchange coverage, we will be adding data from various crypto sources – like TeraExchange as well as other exchanges and index generating resources. We are looking forward to introducing new QuikStrike tools as this market inevitably moves towards our sweet spot of options pricing and analysis.”

To register for QuikStrike Essentials, visit cmegroup.quikstrike.net. For premium editions of QuikStrike, contact us directly.

 

About Bantix Technologies
Founded in 2000, Bantix Technologies is the industry leader in listed futures and options analytics. Its flagship offering, QuikStrike, is a web-based pricing and analysis software suite that was originally developed for floor brokers. It’s now used internationally on trading desks at major investment banks, hedge funds, and brokerage houses. Bantix Technologies is based out of Glen Ellyn, IL, USA and is privately owned and operated.

 

 

* BRTI and BRR: The BRTI is an intraday (updated continuously), US dollar denominated reference rate for Bitcoin transactions that is calculated from consolidated order book data rather than trade prices. It is similar to a real-time index or spot price. The BRR is an end-of-day, US dollar denominated reference rate for Bitcoin transactions based on trade data collected from various exchanges. Similar to a closing price.

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Feature Highlight: Economic Calendar

To access QuikStrike’s Economic Calendar, login to QuikStrike, click on QuikTools in the upper right hand corner and click on Economic Calendar:

 

This will bring up the economic calendar. You can change the timeframe in the top-center of the window. Available options are Today, This Week, Next Week, One Week, and One Month.

What Comes After Bitcoin Futures?

CBOE and CME are both listing Bitcoin futures products in the upcoming couple of weeks (see below for a few differences or go to our blog post for a more robust contract comparison and how to view bitcoin in QuikStrike). Established exchanges are better positioned to handle large volumes of trading like those that have presumable hobbled the major cryptocurrency exchanges today.

Financial market exchanges have the unenviable job of saving traders from themselves (by not allowing the financial ecosystem to take on undue risk that could cause a systemic market meltdown – ahem – Lehman/Bear/et al.) while trying to get enough market participants to trade their product(s) so that they have liquidity. Not too hot, and not too cold, but hot enough to earn profits from fees. Historically, only one exchange at a time has been able to effectively list any given product so we expect a dominant contract/exchange to emerge in the next year or so.

After the battle for bitcoin futures plays out, though, one can’t help but wonder what comes next? Here are some possibilities that we consider likely –

Medium Term:
– Options on futures (stay tuned for our bitcoin options analysis)
– Options on calendar spreads

Longer Term:
– E-mini contracts for CME (the original listing will be for 5 bitcoins)
– Weekly options
– Additional contracts in the term structure for the dominant exchange
– ETFs on the futures for retail customers

CBOE vs. CME

Perhaps as a result of the distributed nature of cryptocurrencies, until now, bitcoins have traded on a multitude of cryptocurrency platforms of varying repute and quality forcing the more traditional exchanges to get creative with determining the “true” exchange rate of bitcoin.

The most important difference between the exchanges contracts will be how the price of bitcoin is determined. CBOE’s futures will be based on Gemini’s auction price for BTC/USD. Auctions take place daily at 3pm CT and endeavor to “foster moments of elevated liquidity.” Gemini was founded by the Winklevoss Twins – famous for suing Mark Zuckerberg over the creation of Facebook – who have been some of the most public, early advocates of bitcoin.

CME is taking a more democratic route using price and volume data from “a geographically diverse set of bitcoin trading venues” to “reflect global bitcoin trading activity in a representative and unbiased manner.” For bitcoin historians, their methodology is similar to the first CFTC approved index created by TeraExchange in 2014. The current constituent exchanges for the CME are the following:

What are your thoughts on cryptocurrencies? Just another bubble or the wave of the future? Drop us a line.

Bitcoin Futures: CBOE vs CME

The following table is a consolidation of the best information we have at the time of writing, please consult the relevant exchanges for official specifications and updates.

 

CBOE CME
Trading Starts 5pm CT
Sunday Dec 10th, 2017
5pm CT
Sunday Dec 17th, 2017
Ticker XBT BTC
Settlement Cash Settled Cash Settled
Price Quote Currency USD USD
Contract Size 1 Bitcoin 5 Bitcoins
Underlying Index Valuation Gemini Auction CME CF Bitcoin Real Time Index (BRTI)
Trading Hours 5pm CT Sunday – 3:15pm CT Friday

(closes at 2:45pm on final settlement date)

5pm CT Sunday – 4pm CT Friday
Weekday Trading Break 3:15pm – 3:30pm CT 5pm – 6pm CT
Contracts – Weekly Up to 4 None
Contracts – Serials (Monthly) 3 Serials 2 Serials
Contracts – Quarterly (IMM) 3 Monthlies 2 Monthlies
Minimim Price Interval 10.00 points ($10.00/contract) $5/bitcoin ($25/contract)
Spreads 0.01 points ($0.01/contract) $1/bitcoin ($5/contract)
Position Limits – Across All Expiries 5,000 contracts (5,000 bitcoins) net long or short in all futures contract expirations combined 5,000 contracts (25,000 bitcoins) in single months outside the spot month and in all months combined
 Position Limits – Front Contract 1,000 contracts (1,000 bitcoins) in the expiring futures contract, commencing at the start of trading 5 business days prior to final settlement date 1,000 contracts (5,000 bitcoins)
Maximum Order Size Unknown 100 contracts (Globex)
Trading Halt – 2 minute 10% up or down 7%, 13% up or down

(soft halt/monitoring period)

Trading Halt – 5 minute 20% up or down
Trading Halt – Hard Limit 20% up or down
Fees $0.25-$0.50 per contract, waived in Dec 2017 Unknown
Initial Margin 33% 35%
Other Restrictions Market orders will not be accepted (Only stop limit orders)
Additional Information CBOE Contract Specifications  CME Bitcoin FAQ

Bitcoin in QuikStrike

Did you know you can view Bitcoin in QuikStrike? Under the Benchmark Summary section click on “BRTI Chart” in the left hand navigation:

BRTI – CME CF Bitcoin Real Time Index

An intraday (updated continuously), USD denominated reference rate for Bitcoin transactions calculated from consolidated order book data rather than trade prices. Similar to a real-time index or spot price. Full methodology available here.

BRR – CME CF Bitcoin Reference Rate

An end-of-day, USD denominated reference rate for Bitcoin transactions based on data collected from various exchanges. Similar to a closing price. Full methodology available here.

 

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