As interest for smaller-sized cryptocurrency futures grows, Micro Ether futures from CME Group provide market participants an additional choice for managing ether price risk or fine-tuning their ether exposure.
Available at CME Group, a regulated derivatives marketplace and home to Bitcoin futures and options, Micro Ether futures offer the same features as the larger, Ether futures contract but with a smaller capital requirement. Similar to the larger sized contract, Micro Ether futures (ticker symbol MET) is a USD cash-settled contract based on the CME CF Ether Dollar Reference Rate (ETHUSD_RR) which serves as a once-a-day reference rate of the US dollar price of one ether as of 4:00 p.m. London time.
Each day, the Ether Dollar Reference Rate administrator aggregates the trade flow of major ether spot exchanges during a one-hour calculation window. This one-hour window is then partitioned into twelve, five-minute intervals, where the Ether Dollar Reference Rate is calculated as the equally weighted average of the volume-weighted medians of all twelve partitions.
While the Ether futures contract is equivalent to 50 ether, the Micro Ether futures contract is equivalent to one-tenth of one ether ‒ making the micro contract 1/500 the size of the larger Ether futures contract.
For example, if the price of ether (as tracked by the Ether Dollar Reference Rate) is $4000, the notional value of one Micro Ether futures contract would be $400. The tick increment of the Micro Ether futures is one half of one index point ‒ so a one tick move in Micro Ether is equivalent to $0.05 per contract ‒ making it a cost-efficient way to participate in the growing ether market.
Micro Ether futures are listed on the nearest six consecutive monthly contracts, inclusive of the nearest two December contracts. For example, assume it’s January and the six consecutive contract months are January, February, March, April, May, and June. In addition, that year’s December contract plus next year’s December contract will also be listed. As one contract expires, the next contract to complete the six-month lineup is added.
When the December contract expires, the June contract becomes active, in addition to the December contract for the next year. So, at any time, there are six consecutive monthly contracts and only two December contracts listed. This process continues throughout each year.
Micro Ether futures follow the same expiration as the larger contract ‒ expiring the last Friday of the contract month and settling in cash to the Ether Dollar Reference Rate on the last day of trading. Micro Ether futures trade Sunday through Friday, nearly 24 hours per day and are block trade eligible.
At a 500 to 1 ratio, Micro Ether and Ether futures will be eligible for margin and risk offsets for those interested in spreading the contracts or using both contracts to access the market or hedge related ether exposures. That gives you more flexibility and precision for managing positions as market conditions change, using the contract that best suits your goals with greater access to liquidity.
Micro Ether futures join the expanding suite of Cryptocurrency products at CME Group, offering another choice for price discovery and risk management in the growing ether ecosystem.