LedgerX takes out the first long-term future Bitcoin options valued at US $ 10,000

LedgerX has just started its first long-term Bitcoin futures option under the name Long Term Variable Income Security (LEAPS), the platform has matched the operation in previous days and expires on December 28, 2018.

Under the terms of the agreement, the buyer has the right to acquire Bitcoin at a price of US $ 10,000 on that date, or almost a 30% premium over the current price.

However, since the buyer only makes money if the price is greater than US $ 10,000 (called the exercise price), the investment can be seen as a reflection of confidence that the price will reach that level on the agreed date.

Such long-term futures options have long been seen in the industry as a sign of much-needed maturity, and in part they could help level the way for even more institutional money to enter space.

In an exclusive interview with CoinDesk, LedgerX CEO Paul Chou sought to position the milestone as the first of many more before the cryptocurrency market can truly be considered mature.

Chou said:

"There will be, I hope, many more changes in the future. This is the first, but at least it gives you the first conjecture of different institutional operators about how the Bitcoin dynamic will be from now until 2018. "

The commercial option was included by LedgerX on Friday night, and to Chou's surprise, two institutional investors accepted the terms of the agreement a day later.

Under the agreements, the buyer agreed a price of US $ 2,250.25 for the trade, which means that the seller collects that money if the price is less than US $ 10,000 by the end of next year, and the buyer can buy Bitcoin at the price of exercise if it is greater.

Unlike a futures exchange, however, the buyer is not obligated to buy the asset.

"If the price goes to zero, you do not have to pay $ 10,000 for that," Chou said. "But if in a year from now it's $ 20,000, then you can exercise your options."

Based on LedgerX's own calculations (made using the Nobel Prize-winning Black-Scholes financial market model), the startup believes there is a 25 percent chance that Bitcoin will reach that level in the allotted time.

Soft release

Although this is the first LEAPS financial instrument matched by LedgerX based in New York, the latter have been reaching ever higher trade volumes since its smooth release a month ago.

As reported by CoinDesk, LedgerX negotiated $ 1 million in Bitcoin derivatives in its first week of trading, which ended on October 20.

Since then, the first cryptocurrency firm to which the CFTC has granted a derivative compensation organization license (DCO) has registered one day of US $ 1 million, another of US $ 1.6 million and on November 15 a record day of US $ 2.6 million.

Since LedgerX listed the LEAPS option at 5:30 p.m. on Friday afternoon, Chou says they saw an additional exchange of $ 500,000 before midnight. "That's for a week's vacation too," he said. "So we were shocked." He estimates that the company has made approximately US $ 16 million in notional bitcoins transactions to date.

While startup figures seem to indicate active early interest, legacy institutions such as the Chicago Mercantile Exchange (CME Group) and Chicago Board Options Exchange (CBOE) recently revealed their own similar plans.

Although Chou hopes to maintain his first-player advantage, he said there is not a difficult date to launch the full operation. Rather, your team wants to make sure that the platform is extended beyond the one million messages it sends per day before this milestone. He says he would be "surprised" if it takes "more than a month" to conclude that it could be sooner.

Source: CoinDesk