Bitcoin Futures Launched

Source: investors.com

Sunday was the launch of the futures contract of bitcoin on the CBOE. It was a very successful launch and trading had to be halted to put the brakes on the raging market activity. This is just the beginning as the CME is launching their own futures contract on December 18.

A future is an agreement to buy or sell a certain product within a certain date. The option does not buy or sell the underlying asset, it is like a side bet on the price movement of the underlying asset. So the bottom line is it is a derivative of the asset.

It can act to stabilize the price of the asset but it can also be a device to manipulate the price. This can be seen in the COMEX market when it comes to precious metals. So it is a double edged sword and it should be watched closely.

Source: fortune.com