Start Trading CBOE Futures
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Start Trading CBOE Futures

CBOE Futures have just launched and the market is reacting quite positively.  Find out how to trade.

Published: December 11th, 2017 | Author: David Marc

Unless you have been living under a bitrock you have no doubt taken note that bitcoin futures have started to trade on the Chicago Board of Options Exchange today, a debutante cotillion of sorts for everyone's favorite cryptocurrency. This is somewhat of a dress rehearsal for the larger Chicago Mercantile Exchange launch next week.

How CBOE Contracts Work

CBOE offers monthly Futures contracts although they might release weeklies as volumes dictate. The contracts are cash settled, with the underlying index based on the Winklevoss-owned and operated Gemini Exchange.

Each contract is 1 bitcoin, with price intervals/ticks of $10. There is a 44% margin requirement on CBOE futures.

Circuit breakers:
             Two-minute halt to trading if futures contract closest to expiration move 10% above/below daily settlement of the prior day; (already happened twice)
             There is a five minute halt if the futures contract closest to expiration moves 20% above/below the daily settlement price on the prior day;
             There is at least a five minute halt if the futures contract closest to expiration moves 30% above/below the daily settlement price on the prior day.

We have compiled a partial list of the brokers that have stated publicly their position on bitcoin futures either at CBOE or next week at CME.

Brokers Offering Access? Comments
ABN Amro CBOE Clients must submit written request
ADM Investor Services No  
Charles Schwab No   
Goldman Sachs Partial - CME For some clients - unclear requirements
Interactive Brokers CME 50% margin, long only.
JP Morgan No  
Merrill Lynch No  
Morgan Stanley No  
Trade Station CBOE  
Wedbush CBOE  
Wells Fargo No  

If we are missing any brokers or have information above that is inaccurate, please let us know.  

CBOE futures are currently in extreme contango, which even the most bit-cynical of mainstream traders will recognize as offering crazy opportunities for arbitrage. We should note that this is not as simple as it could be, due to three factors:

1. Network congestion slows down transactions, so getting money in and out off exchanges can be burdensome; 
2. Many exchanges are experiencing record volumes and performance has been suffering as a result. Actually, the CBOE website itself was down shortly after trading opened;
3. New accounts will often be subject to max account size limitations, dependent on completing KYC requirements that will be slower than usual.

That being said. The CBOE future settling in January is currently at $18,620, which is a full $2,000 above the spot price. Buying the spot on a bitcoin exchange while shorting the CBOE will appear to the experienced trader as a real life too-good-to-be-true scenario.

Note that setting up an account at an exchange might prove time consuming at the moment due to overwhelming demand. However, these arbitrage opportunities are likely to pop up now and again in the medium term, so it makes sense to take the plunge.

We would be very happy to hear from successful/not successful arbitrage traders. Please also let us know if we have missed any brokerages offering CBOE/CME futures contracts so we may update the list.

Bitcoin Price (USD): 853.48