Facebook integration
Select Page

How to Trade Cryptocurrency Futures & Options

The Basics:

What is a commodity futures contract?

A commodity futures contract is an agreement to buy or sell a particular commodity at a future date. The price and the amount of the commodity are fixed at the time of the agreement (purchase / sale). Similar to trading stocks, commodity futures contracts trade on regulated futures exchanges such as the CME Group (Chicago Mercantile Exchange) or the Coinbase Derivatives Exchange. These contracts typically can be bought and sold throughout the duration of the contract. The majority of commodity futures contracts are liquidated prior to the delivery / expiration date.

A commodity futures option gives the purchaser the right to buy or sell a particular futures contract at a future date for a particular price. These contracts can also be bought and sold throughout the duration of the contract’s term.

Commodity futures & options are bought and sold for both speculative and hedging purposes.

With limited exceptions, commodity futures and options must be traded through futures brokers who are registered with the CFTC (Commodity Futures Trading Commission) and NFA (National Futures Association).

The Cryptocurrency Futures Contracts:

Micro Bitcoin  •  Nano Bitcoin  •  Micro Ether  •  Nano Ether

Cryptocurrency trading has transformed the financial landscape, providing a borderless asset class that enables individuals around the world to engage in the global economy with unmatched freedom and efficiency. Its increasing popularity signals a rising confidence in digital assets, highlighting their ability to reshape wealth management, investment strategies, and financial inclusion across the globe.

Bitcoin Futures Trading

At Insignia Futures & Options, we’re excited to offer our clients unparalleled access to the dynamic world of cryptocurrency futures trading through the Micro Bitcoin and Ether futures contracts from the CME Group (Chicago Mercantile Exchange) futures exchange. These innovative contracts provide a cost-effective, regulated way to participate in the cryptocurrency market, allowing traders to hedge their digital asset exposure or speculate on the future price movements of Bitcoin and Ethereum with reduced financial commitment. The Micro Bitcoin and Ether futures are designed to mirror the market movements of their respective cryptocurrencies, but at a fraction of the size of standard contracts, making them an excellent choice for individuals looking to diversify their investment strategies without the need for substantial capital outlays. Our InsigniaTrader trading platform ensures a seamless trading experience with robust support and educational resources to help you navigate these exciting opportunities.

Additionally, Insignia Futures & Options offers our clients trading in the cutting-edge Nano Bitcoin and Ether futures contracts available through the Coinbase Derivatives Exchange. These contracts represent the forefront of digital asset derivatives trading, offering even smaller contract sizes than their micro counterparts, thus lowering the investment requirement even more for investors interested in trading the crypto futures market. The Nano Bitcoin and Ether futures contracts are tailored for individual investors seeking exposure to cryptocurrency markets with minimal investment, providing a highly flexible and accessible way to manage risk or speculate on the price movements of Bitcoin and Ethereum.

The Details:

Trading futures & options.

To start trading Cryptocurrency futures & options, you will first need to open a futures trading account…

Once you’ve opened an account, you will have access to our trading platform (you may also phone your orders in to our 24 hours trade desk).

All futures & options contracts have symbols which are used to identify the contracts you wish to trade. For the Cryptocurrency futures contracts, the root symbols are…

  • Micro Bitcoin futures – ticker symbol: MBT
  • Nano Bitcoin futures – ticker symbol: BIT
  • Micro Ether futures – ticker symbol: MET
  • Nano Ether futures – ticker symbol: ET

As these are ‘futures’ contracts, there will be contracts available to trade with different months & years.  Many traders will choose to trade the most active month, also known as the “front” month, as this will typically be the contract with the most trading volume.

When placing an order, you will identify the exact contract you wish to trade by appending the month and year codes to the root symbol. For example, if you wish to trade a September 2024 Micro Bitcoin futures contract, the full symbol will be: MBT.U24

In this example, MBT is the root symbol (a period is then inserted), U is the month code for September and 24 is the last two digits of the contract year. A period is always used between the root symbol and the month/year code when placing trades through our InsigniaTrader platform.

Cryptocurrency Futures Trading

Trade Entry:

When trading futures and options, you can either go long (buy) if you think prices will rise or go short (sell) if you think prices will drop.

To enter a futures contract trade, we will enter the following information into the trading platform.

• Number of contracts to be traded
• Trade direction – Buy or Sell
• Exact contract symbol – i.e. MBT.U24
• Order Type: Market, Limit or Stop
• Order Price (if Limit or Stop order)
• Order Duration: Day (current trading session) or GTC (Good Till Canceled)

Once your order has been entered, our trading platform will give you a ticket number for the order as well as a notification when the order gets filled. If/when the order is executed, you will then have either a long or short position depending on the Trade Direction you chose.  You can modify or cancel any working order prior to it being filled or expiring. 

The Cryptocurrency futures contracts trades in specified minimum point increments & dollar amount equivalents…

  • Micro Bitcoin (MBT): 5 points = $0.50
  • Micro Ether (MET): 0.5 points = $0.05
  • Nano Bitcoin (BIT): 5 points = $0.05
  • Nano Ether (ET): 0.50 points = $0.05

One Micro Bitcoin, Micro Ether and Nano Ether contract is equal to 1/10 the value of one Bitcoin or Ether coin respectively. One Nano Bitcoin contract is equal to 1/100 the value of one Bitcoin.

Let’s assume you were interested in trading one Micro Bitcoin futures contract.

In this example, you decide to go long (bought) one (1) futures contract at a price of 61950. If Micro Bitcoin futures prices were to rise to 62355, that would be a 405 point gain or $40.50 (405 x $0.10). Conversely, if the Micro Bitcoin futures price dropped to 61580 that would be a 370 point loss or $37.00 (370 x $0.10).

Please note, when calculating profits or losses, you must also take into account commissions and associated trade fees to determine your net profit or loss.

Margin Requirements:
How much money do I need to trade?

When trading commodity futures contracts, the futures exchanges will set what are called Margin Requirements for each commodity. Margins in futures trading is NOT similar to margins in stock/equity trading. Think of margin requirements as a performance bond. The dollar amount you must have available in your account in order to trade one particular commodity futures contract. To view the current, initial margin requirements for the Cryptocurrency futures contracts (or any other major futures contract), please visit our Margin Requirements web page. You’ll find the margin requirement for these contracts under the ‘Cryptocurrencies’ section of the table.

Our Futures Margins Requirements web page will show all of the current margin requirements needed for trading one contract – either for position trading or Day-Trading. The Initial margin requirements are for position trading. Position trading refers to holding a futures contract for longer than one day (trading session).

We also offer our Ultra-Low Day-Trade margins. Day-Trade margins are typically set much lower than the initial margin requirement and allow futures traders to participate in a given futures contract just for the currents day’s trading session with less funds. When Day-Trading, you must liquidate all open positions by the close of the current trading session or have the available funds in your account for the full, initial margin requirement to avoid a margin call.

*Please Note: Margin requirements are subject to change without notice from the futures exchanges.

Take the Next Step…

Open Your Futures Trading Account Now.

If you’re ready to get started trading commodity futures, the next step is to open your trading account. Click the following button to access our New Accounts web page… 

 

If you still have questions, feel free to contact us via ChatInformation Request Form or Phone,  We will be happy to assist you.

 

 

Additional Investor Information:  NFA Virtual Currencies Advisory   •   CFTC Virtual Currencies Advisory