The second major financial derivative based on bitcoin is beginning to trade on the Chicago Mercantile Exchange.

The CHICAGO MERCANTILE EXCHANGE Group, one of  the US's premier exchanges of options and futures ,started bitcoin options contracts for trading at 6 p.m. EST Sunday. The initial price for bitcoin futures was $20,650, and the electronic currency was trading at $20,135 at 6:08 p.m. EST.

The electronic currency has exploded in popularity and equity this year whilst drawing questions about its volatility.

The CME bitcoin derivatives, like the bitcoin futures that now trade on the Chicago Board Options Exchange, do not consist of real bitcoin. They will measure an index of bitcoin price. Each contract will be for 5 bitcoin.  

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CME Group, the operator of the world's largest futures exchange, launched its bitcoin futures product on December 18, 2017.

) You enter into this contract on an exchange like CME. Funds must be fully cleared in your account before they can be used to trade any futures contracts, including bitcoin futures. Although the Chicago Board Options Exchange (CBOE) had opened a futures market a week earlier on December 10, trading was thin until the CME joined the market. 

A CFD (contract for difference) is a popular type of derivative product that gives traders the ability to speculate on, or hedge on movements in the underlying equity indices and commodities without the need to physically own those assets.

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