Bitcoin Forum

Found MPEX's owner in #bitcoin-assets who offered me a great deal (In my opinion) on a 3 month put option on the price of BTC tied to Bitfinex last ask price.

Strike price of $215 USD

Fee of $7.50 USD in BTC per BTC optioned.

Time for you all to lose your pants, socks, sweaters and all in BTC and for me to make THOUSANDS!

10,000 BTC, yet you're posting to get peanuts from a lame signature campaign.

Hmmmmmm.....

Mircea and her shenanigans
Anyways post the relevant Bitcoin-Assets thread and log for evidence if you did take the bet.
Seems like a fun one if you actually have the money to put up.

Or if the offer is open to all users would like to see who bites on this  ;D

Bitcoin is going to 150-175 in the next three months which by my estimate of 170 will net me $375,000. After conversion fees and hiding said money lets say $300,000. Nice.

And you bet my ass I will be using Bitmixer to mix my coins too. :)


Wait....BUY 10,000 BTC...LOL sir...do you know what an option EVEN IS?

I thought Mircea (Popescu) was a guy and was running a gambling site..

Or am I wrong and it was an exchange?

Wasn't it the guy called by the US agency to give info about his business to them?

So, did you have to put up 75k? is that how it works? and if btc doesnt hit 215 within 3 months, you lose it, if it does hit that, you get the difference from the btc price when you made the deal correct? I need to start playing the btc game again. i did it a lot when btc was sub 5 dollars a  piece and made a killing, but i never optioned, put or anything, I  just bought low, sold when it went up a few dollars, rinse, repeat. to do that today, you have to have a shit ton of money, but back then, i could buy 1k coins no problem. make a 3k profit in a few days to a week, easy money.. then i arbitraged, didnt even know the name of it then, lol.... ahhh, the good ole days...

Reserved to either eat crow or laugh my ass off. I really dont want bitcoin to go to your low levels, it might, but i sure hope not....

good deal sir i bet you will make more than what you think

One day each satoshi will be worth $1 so why bother wasting it ;D

I don't think that this is true, but if it is I'm at least 50% sure that Op will loose his funds. ;)

What he does is basically gambling. Unless he's a millionaire already, he's taking way too much risk. Given the most recent price action and upcoming news (Wallstreet investment instruments becoming available)  I see a decent chance, that we're about to leave the ground.

ya.ya.yo!

You sound like a high roller to me, but don't lets these other idiots put you down, its good to see a man put his money where is heart/mouth is.
Maybe the money you invested in this is just spare change to you, no one hear knows your financle situation but you, im sure you know the rules to only invest what you can afford.
Anyway i really hope you know what your doing, good luck!

plz tell me more about your crystal ball, your prediction seems a bit random, just posted to increase the credibility of your action described in your first post

the reality is that you are just gambling like everyone else

The things that's so risky with bets like this (it's a bet, basically) and shorts/longs on margin is the mere fact that the volatility can wipe you out completely, even if the general direction is in your favor. By just holding coins, this can't happen to you.

There is only two cases where someone would sell this put for only $7.50(32% of implied volatility):

1. He is completely clueless.

or

2. He's never intended to pay it back in the case he loses money.

logs or it didnt happen

Exactly, need a transaction ID of some sorts, or this is just the OP trying to troll the shit out of us.

http://www.quickmeme.com/img/b9/b9d6db15dd1284904094ec0c042f3ccd596ddf16c5eb114d6479820c17fb0ae1.jpg

Sum value of your assets is below $4,000 US, and I won't even mention your debt. You are a tiny fish in a small pond, you are lying, and worst of all you are boring.

Obvious troll lol

OR

He managed to get 10k Bitcoins via signature camps. :D

Indeed, it seems strange, but I don't see why not make even more extra peanuts if you are going to be posting anyway? It's always good to make BTC no matter what, and it's an activity you'll be doing regardless you are rich or not (even tho if I was mega rich I would probably be too busy relaxing on a beach, but even then I would still be addicting to posting a bit with my smartphone lol).

Poor dude  8) 

Most of the options just never execute, the pricing model is like a casino house, your chance of winning against the house is extremely low

If you are not trolling, which I figure is 50/50, you did get a good deal on the option.  As a bitcoin fan I obviously hope you don't make a lot of money on your investment but for only $7.50 per bitcoin I think that is a great price.  After all 3 months ago bitcoin was at what, $300+?

Im sorry but I just can't believe you just bought 10K BTC like it's nothing without providing any proof. IF you are going to go as far as saying it on a public forum, you could at least provide some sort of evidence.

Your correct partially, Mircea was a guy the person on the forums a long while back was portrayed as a girl
And mpex is technically an investment site and exchange.
That said one of their assets is a betting site (bitbet) so I can see why you got confused.
And yep that was the one also about Eric Vorhees and said FU lol.

Are there reliable(or half-reliable) sites to trade btc options?

Cmon bitcoin drop now and make me money...  :)

I wonder what would happen if the coin price moves in the other direction. I'm sure you have all the plans put in place in case the result did not turn out as what you expected? By the way, just wondering where did you manage to secure that amount of funding? Kind of curious since that is not small amount by any means.

It's like betting on the horses. It's a long shot, but I suppose you could make as much as 5 to 1 odds on it. 
How credible is the person or organization selling you the option? How credible are you to pay up if it goes the other way?
Seems like a scam for everyone involved.

Don't forget counter party risk.

This is going to prove either a very smart or a very dumb move IMO.
One thing is for certain: It's a gamble.

I hope you put down only what you can afford to lose.

without the proof there is people that sell also tour effeil for sure.
probably it was only a 1 btc put option ;)

You can't get wiped out when you purchase options.

He didn't buy 10k BTC, he bought a 10k BTC Put option.


There's coinut.com but you won't get anything close to that amount of volume.

You'd need to make OTC deals.


If it doesn't turn out he loses $75 000.  If it does turn out he'll make $75000 for every $7.5 the price goes under 207.5.

Not sure why so many people think OP actually bought 10,000 BTC. He clearly said in his original post that the option cost him $7.50 per BTC. 7.5*10,000 = $75,000.

I don't think it's a stupid move. Looking at the Bitcoin price charts, the trend has been going downwards ever since late 2013. Is it really that unrealistic to think that it won't continue declining for another couple of months?


You're probably thinking of shorting, which is a different thing. An option is essentially a bet that Bitcoin will/won't be above/below a certain price on/by a certain date.

I don't get how this works. How can he acquire 10000 for 75$? Where is the business for the one offering the BTC for such price? I guess im missing the point here.

He didn't acquire 10,000 BTC. Here's a short explanation of put options:


It cost $75,000 for OP to buy a put contract to sell 10,000 BTC at a strike price of $215 per bitcoin. The contract expires in three months and will expire worthless if the price of a bitcoin is above $215 at that point. But the value of the contract will go up before then as long as the value of a bitcoin drops.

If the price of BTC is $207.50 then OP could sell 10,000 BTC for $215 making 7.50*10,000 = $75,000. Since the contract cost $75,000, he would be neutral overall.

If the price of BTC is $200 then OP could sell 10,000 BTC for $215 making 15*10,000 = $150,000. Since the contract cost $75,000, he would have made a $75,000 profit, and so on. The lower the price of Bitcoin is, the more OP benefits.

Wow, perusing BCT I came upon this...
Wow, Whatsbitcoin is going to make $300k because bitcoin IS going to bottom out somewhere around $170 within the next 60 days.
Sure hope his counterparty in this trade has hedged all risk on this trade because it'd be a shame if Whatsbitcoin gets screwed after making this awesome trade.

JL

Your chance of making "THOUSANDS" is extremely low, good luck with your purchase, you are going to need lots of luck.

Wait, I am confused.
So, this is like a guessing game?
He placed a bet, estimating that the price of Bitcoin will be under $215, and if it is he wins, if it's not he loses.
Is that right?

Yeah, can someone please explain to me how this put options thing works?
I have never heard of it before, then again I am not a gambler  :P

Here's a good one with an example:
http://www.investopedia.com/terms/p/putoption.asp (http://www.investopedia.com/terms/p/putoption.asp)

...and an other more generic but still useful one:
http://en.wikipedia.org/wiki/Put_option (http://en.wikipedia.org/wiki/Put_option)

So if I understand correctly:
Seller, says he will lock the price of his shares at $25 each.
Buyer, speculates that in 3 months time, the price of each share will drop below $25.
So he gets one of these put options for 1K shares for the period of 3 months.

So if in 3 months time the price of each share is $19.
The buyer then has the right so sell those 1K shares for $25 and make a profit of $6 per share.

(am I correct so far?)

If in 3 months time  the price of each share is $28 - then what? I didn't get it.
What does the buyer pay?

The buyer losses the premium (cost) he paid for the option. Option sellers take a greater (potential) risk, but buyers tend to lose long-term. FYI: You might want to learn call options first because they are a bit more 'intuitive', since the buyer is expecting prices to rise and the call option seller is expecting prices to fall.*
*...and/or hedging the risk on something they own, looking for a longer-term price rise.

Not sure who would take the risk of writing that many put contracts at what I would consider pretty close to ATM (huge counterparty risk here that it doesn't get honored). Having said that, those saying he needs luck need to realize BTC is still in a downtrend, evident by the resistance trendline on a log scale that has yet to be breached (easily drawn on a weekly chart on nearly all exchanges). Below $290-315 depending on exchange, the trend is your friend and it's down. It's reality until it isn't.

EDIT: Even black-scholes puts the option price at about $8.50 given current volatility (which happens to be on the lower end).

MP (owner of MPEX) has been involved in large options deals previously, some of which have been very profitable (http://trilema.com/2014/mpoe-february-2014-statement/) or costly (http://trilema.com/2013/mpoe-march-2013-statement/). That said, there's no way I believe this deal was made without seeing the relevant logs and transaction id.

So OP got a good deal?

The dumbass bought it. Time to grab his money and get outa here.

http://cristianchinabirta.ro/wp-content/uploads/2010/03/gizeh_pyramids.jpg

Also I'm not really sure you can calculate it like that.  Options aren't just based on current volatility.  Instead you should look at the premium and see what is the implied volatility from that.  You're trading volatility, future volatility.

Black scholes needs an annual implied volatility of 33% to valuate this put at $8.50. I highly doubt this is the case for btc options market.

The variables are all there to price a hypothetical contract value given there really is no secondary market.

I used the volatility index as a proxy: https://btcvol.info/

Granted, this is a rolling 30 day value so scale appropriately for annualized. I would say the implied vol is pretty accurate given historic swings even though we're at historically low levels of volatility.

>MPEX's owner
>great deal


Impossible. Mircea Popescu is a scammer. It takes only a few minutes of googling to find this out.

Very nice point  with the hedging.  To elaborate,

the call option seller can use delta hedging so that they can have a properly hedged bet.  But you lose money from delta hedging.  If an asset is volatile you'll lose more money from delta hedging.  If an asset is less volatile the option writer will make money.  This means that an option writer is actually short volatility.  They make more money if the asset is less volatile then the premium.

In the same way the option buyer could delta hedge and they'd make money if Bitcoin is more volatile then the implied volatility built into the contract.

Options are really interesting stuff.  I'm excited for the growth of options clearinghouses rather than just the OTC deals we've been seing.

That's a very simple way of looking at it but yes, in essence you are correct.

He paid $75,000 for the right to sell 10,000 bitcoins at $215 per bitcoin in three months. For example, if the price is $200 in three months then he will be able to make 15*10,000 = $150,000. Take away the $75,000 he spent to make the contract and he ends up $75,000 in profit.

Obviously the more the price goes down, the more OP profits. If the price happens to be $207.50 then OP's situation remains neutral. If it happens to be any higher than that then OP would have lost money (up to a maximum of the $75,000 he spent initially).

EDIT: In my explanation you quoted, I probably should have used "for $215 per bitcoin" than "for $215". My mistake.