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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