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Micro Bitcoin Futures: What Traders Need to Know

Micro Bitcoin Futures

Micro Bitcoin Futures (MBT) are an exciting new futures contract that allows traders to get long or short to position themselves for movements in the price of Bitcoin. A few key important points to know to start trading Micro Bitcoin Futures (MBT).

Smaller contract size: Micro Bitcoin futures are 1/10th of one Bitcoin and 1/50th of the standard Bitcoin futures contract. This smaller contract allows for an efficient and cost-effective way to hedge the bitcoin price risk or fine-tune bitcoin exposure. MBT provides the same features as the standard contract with a smaller capital requirement.

Tick Size: The minimum tick increment is $5 per Bitcoin and therefore the minimum tick value is $5 * 1/10th Bitcoin = $0.50. If Micro Bitcoin futures have a last trade price of 55,850 then the next tradeable price below would be 55,845 and the next tradeable price above would be 55,855.
Trading Hours: Trade nearly around the clock with trading hours from Sunday to Friday from 5:00pm to 4:00pm CT.

Contract Months Listed: Micro Bitcoin futures are listed for six consecutive monthly contracts, inclusive of the nearest two December contracts. This allows traders to enjoy flexibility in matching their price expectations to a variety of time frames.

  • For example, assume it is May 2021. The six consecutive contract months are May, June, July, August, September and October.
  • In addition, this year’s December contract will be listed plus December 2022 contract will be listed.
  • As one contract expires, the next contract to complete the six consecutive month lineup is added.
  • At any given time, there are six consecutive monthly contracts and only two December contracts listed. This process continues throughout each year.

Rolling a Position: Traders with a position in Micro Bitcoin futures (MBT) who wish to keep the position beyond the current calendar month can choose to “roll forward” to the next calendar month using a calendar spread. MBT futures use the same calendar spread convention as stock index futures.

A calendar spread allows a trader to exit the expiring contract and into a deferred contract by selling one month and purchasing the next month in two separate transactions. By doing a calendar spread, a trader’s bitcoin futures position can be extended by one month or more depending on which deferred contract he rolls into.

Cash Settlement at Expiration: Micro Bitcoin futures are cash-settled on the last Friday of the contract month to the CME CF BRR reference rate which is published at 4:00pm London time. The CME CF BRR aggregates actual trades from Bitcoin spot exchanges and trading platforms and then calculates and publishes the BRR Note: The last Friday of the contract month must be a business day for both the US and UK, otherwise the final settlement will occur on the preceding business day.

Final Settlement Price: The final settlement price is calculated to the nearest $0.01, unlike the daily settlement which is calculated to the minimum tick increment of $5 per Bitcoin. For example, the final settlement price for April 2021 futures was 56,127.49 and any remaining open positions would be cash-settled vs. this final settlement price.

Centralized Marketplace: MTB futures are listed at the CME Group. MBT futures trade on the CME’s Globex electronic trading system, a highly secure and redundant electronic trading system with a single central limit order book (CLOB). MTB futures clear at the CME Clearinghouse which settles every day with all clearing brokers.

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