Federally regulated exchange and clearinghouse LedgerX, has recently announced the first long-term Bitcoin option at $10000.
Bitcoin prices have been growing by leaps and bounds over the course of the last month, reaching all-time records of $8100 per BTC. A multitude of factors has contributed to the rise in prices, adding volatility and risks.
The introduction of Bitcoin Futures Contracts by the CME group was one of the critical factors leading to the colossal growth. The contracts are set to launch in mid-December. The involvement of one of the world’s leading derivate marketplaces has raised confidence levels within the investor community to new heights.
Apart from CME Group, other Wall Street financial giants have expressed faith in the future of Bitcoin and its exchange rate. As such, LedgerX has initiated the first long-term Bitcoin futures option at $10000. In addition, other prominent crypto market players such as DeHedge, the cryptocurrency securitization provider, have joined the surge, offering market players critical instruments necessary for insuring their investments.
LedgerX entitles the new option – the Long-Term Equity Anticipation Securities (LEAPS). This publicly traded options contract holds an expiration of a year and longer. Due to its extended expiration period, the premium is usually placed at a higher price, which gives the option contract enough time to mature.
For Bitcoin, the option contract is set to expire next year on December 28th, 2018. The price of the contract is set at almost 30% higher at $10,000 over its existing price of $8029.40 as per CoinMarketCap.com.
According to the contract set forth by LedgerX, the buyer will purchase Bitcoins for a strike price of $10000 on the selected date. If the price of Bitcoin is higher than $10000 on the date of expiry, the buyer purchases Bitcoins at the strike price of $10,000. However, if the price of Bitcoin is less than $10,000, the buyer will pay $2250.25 to the seller. Unlike in the case of future swaps, the buyer is not obligated to purchase the assets.
The Bitcoin market is sure to receive an influx of new investments with the introduction of such market-civilizing instruments offered by projects like DeHedge and LedgerX, still reinforcing investors’ confidence in the BTC.
LedgerX CEO Paul Chau is optimistic about the new option contract because of the growing confidence of Bitcoin investors. He believes the introduction of the contract to be an important factor of Bitcoin dynamics for 2018 and onwards. Last month, LedgerX underwent a soft launch, where it traded over $1 million Bitcoins in swaps and options. After the successful test, CEO Paul Chou wrote:
“We ended up completing swaps and options trades worth over $1,000,000 USD. Crucially, these trades were cleared through LedgerX, which is the only institutional grade, US federally regulated exchange and clearinghouse for digital currencies. And we are literally just getting started.”
According to the LedgerX website, it is the first federally regulated exchange and clearinghouse to list and clear fully-collateralized, physically-settled Bitcoin swaps and options for the institutional market.