Crypto Derivatives Exchange OKEx Launches Options on Ether

Jun 5, 2020 at 16:50 UTCUpdated Jun 5, 2020 at 16:58 UTC.LIFTOFF: A SpaceX launch from Cape Canaveral, Fla., in 2017.Malta-based cryptocurrency exchange OKEx rolled out option contracts on Ethereum's ether token on Thursday, ending the Panama-based Deribit's virtual monopoly in the space.

"OKEx ETH Options Contracts will be settled in ETH. Each contract's face value of ETH/USD options is 1 ETH," Jay Hao, CEO of OKEx, told CoinDesk.

To avoid what OKEx calls a "Societal clawback", the exchange has already established an ETH/USD options insurance fund of 1,000 ETH, worth about $240,000 as of Friday.

One may argue ether options are hedging instruments for dApps.

Investor interest in the crypto derivatives market has exploded this year, with open interest in ether futures listed on major exchanges rising by 100%. Meanwhile, open interest in ether options listed on Deribit has skyrocketed by over 900%, according to the data provided by the crypto derivatives research firm Skew.As of Thursday, OKEx was the largest ether futures exchange by open interest, accounting for 26% of the global tally of $672 million.

"Adding ETH options is a logical next step for us, and also a market demand particularly as we pride ourselves on the wide variety of products and features that we offer traders, allowing them to keep their pricing strategies more flexible," said Hao.While OKEx dominates the futures product, the options segment is ruled by Deribit exchange.

As of Thursday, Deribit accounted for more than 75% of the total open interest of $1.3 billion in BTC options and contributed almost the entire open interest of $144.35 million in ether options.

OKEx contributed only 4% of the total open interest in BTC options.

OKEx has plenty of ground to cover before threatening Deribit's number one position in the options market.

The exchange has traded $1 million worth of ether option contracts since inception and has $342,000 worth of open positions at press time.