Bitcoin Futures Contracts Basics | TD Ameritrade Network: Futures


– But there are a couple
key differences between the product
that are important that you take
the time for, right? So the very first thing I would
like to emphasize between it is that the CME’s product
is 5 bitcoins versus the CBOEs
which is 1 bitcoin. So that’s a big difference when
you think about it. So when you look at that, that 5 bitcoin to 1 is the first thing
to think about. The second thing
I would say to look at is, how does the tick size work? With the CME product,
it’s a $5 per coin– so think about that. That’s 5 then per coin
times 5 or $25 versus the CBOE product,
which is $10. And then finally
the last thing is, there is a little bit of
difference between the actual
trading hours– Not a ton, but a little bit– so you need to keep track of
that as well. And then finally the last
two things to highlight is, one, there are differences
in exchange fees. The CME’s product is $5 versus
50¢ for the CBOE. And that last one, of course,
is the margin requirement. But the big thing about the
margin requirement to emphasize here is, while CME is 47%
and CBOE’s is 44%, think about it. You have to do that from
a notional value standpoint. So you take where the price is,
let’s say roughly at 20,000, multiply that by 5; that’s how you get the CME product
times that 47%. So you’re talking about
a very large number to place a single trade versus on the CBOE using the
same number, using that 20,000,
multiply that by 44%. But in both cases,
and especially the CBOE, we do have increased margins
that we are using right now because of the fact that the
product is new and it’s got some volatility. – All right, so increased
margins, JB, a little bit of information
there in terms of the difference between
the two products. As far as some of
the specs goes, I’m curious as far as the
difference in the two products as far as the launch last week
at the CBO versus the launch
last night at the CME. What stood out to you? – What was really interesting
about this was the fact that the CBOE product had a
much bigger response. And I think there’s a real
reason to highlight the– or the why of this is because this is a
retailed-focused product. It’s a single coin;
it’s not that expensive. So in the first two hours of
the CBOE’s launch, over 2,000 contracts traded. When you compare that
versus the CME, they had less than 300 trade. So what you saw here was sort
of a very tepid response, where that CME product has more
that institutional feel to it versus the CBOEs, which has
more that retail product. And you kind of can watch that
go for the rest of the day. Overnight right now, a little
under 2,500 products– contracts have traded
for the CBOE. Around 700 for the CME. So you see a little bit more
of a tempered or tepid response to
the CME product. I think that’s just because
the fact it’s just not that much of
a retail-focused product today. – JB, I think there is a–
from my naked eye, I think there’s
a clear difference between the two products. And what you’re saying
is significant. I look at the one
versus the five. I look at the exchange fees. I think you’re right. I think the CBOE is more geared towards the retail investor,
right? So which one is gonna win out
over time, though, is the real question, right? Where’s the big volume
coming from? – No, I think that’s exactly the big question
that’s out there. I think what you’ve seen
is that the CBOE went after a specific
subset of customers, and that subset of customers
were retail-based customers. And they reached out to them,
and they said, “Hey, look. This is a product I know you
want to trade.” Look, you don’t want to
necessarily have to use as much
money as it costs to buy a single bitcoin if you
really wanted that cash market. So CBOE has been able to
leverage and grab that piece, grab that customer base, and that’s where
they’re attracting. You’re starting to see that
happen this week. Again, very good flows
to start off this week. You want to see that continue. Strong flows overnight, and that’s the other thing
to remember. These are 24-hour products,
right? So watching them
and making sure that there’s liquidity
in the Asian hours and the European hours
and then the U.S. hours is really important to see
the success of the products.

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