CME Bitcoin Open Interest Reaches New High Prior to May Contract Expiry
Summary
- CME Bitcoin options open interest reaches an all-time high of $259 million.
- Open interest is up 1890% since the beginning of May.
CME Bitcoin options open interest has reached an all-time high of $259 million, an 1800% percent increase from May 1st. Cryptocurrency derivatives and futures have also seen a general rise in interest in 2020.
Open interest is calculated by the outstanding contracts at the end of the trading day. Thus, open interest helps quantify market interest in the asset. A greater open interest represents greater market interest.
For example, if a trader opens 10 Bitcoin futures contracts for $500,000, open interest will rise to $500,000. However, when the trader closes the position, open interest will decline back to $0 as there are no outstanding contracts. This trade would have created $1 million in trading volume but resulted in the open interest at $0. Thus, looking at open interest in addition to just trading volume is important.
Half of All CME Bitcoin Open Interest Expire
The record high open interest comes just prior to the massive Bitcoin contract expiration. Today 50% of all CME Bitcoin futures and options contracts expired.
The contract expiration may trigger sudden volatility as traders decide to extend their contracts by repurchasing them.
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