Bitcoin Forum

Hi there,

I'm trying to figure out a way to buy PUT options on ASICMiner stock, or, less ideally, short sell it.

Ideally, I'm looking for options with an expiration of a few months and a strike in the range of 1.5 - 2.0BTC.

Is there any way to achieve this, or am I SOL? The options listed for sale on btct and bitfunder don't fit the criteria, and I'm looking to buy, so I can't write my own.

Update:

I will immediately purchase ASICMiner puts expiring September 1st, with a strike of 1.8BTC, and a premium of 0.14BTC.

3 BTC limit.

I'll get some written then reply here. BTCT or Bitfunder?  What's your offer?

I would be prepared to purchase 25 puts immediately at a price of 0.1BTC, strike of 1.8BTC, and expiration of Sep. 1st. BTCT preferred.

Maybe more later when some bitcoins come in.

Interesting. Why are you so bearish on AM?

(Don't worry about dissuading PUT-sellers, the discussion would attract more! ;D)

I've done some statistics with the rate of difficulty increase and the anticipated hashrate increase. They're overvalued.

(I DON'T think they're gonna fail, but I think the odds of being below 1.7BTC before September are worth up to a 0.1BTC premium.)

1st of September is quite an interesting date, indeed. Basically, will AM proof sustainability or not...

What I think:

Your strike is reasonable, but the price too low to even start gambling :)
Maybe you find someone to PUT on date for 0.1 price, but not for immediate option.

Yeah, I was worried about that. Nobody wants their BTC tied up in options unless the premium is large...

I guess none of the exchanges will let you use your held ASICMiner shares as collateral against options? I'm imagining an arrangement where if ASICMiner starts trading near 1.7, then anyone using their shares to cover in the event of exercise will get a maintenance call.

I sense a business opportunity.  :)

In the meantime, that offer stands. I can't beat 0.1BTC per option for the moment. Maybe later I'll consider a higher strike in exchange for a higher price...?

Yah same thought here. I'd bullish on AM and would happily take some PUT options but I'm not tying up my BTC for months for basically 5%. Maybe 20%, minimum.

Such an option is worth about .25 BTC actually. I'd write you a few at that price at the lowest.

In the same vein, I have been wondering for some time now how to increase the volume of options traded on any BTC exchange related to BTC securities.  It seems like a ripe opportunity to generate further interest in the currency, but the options I have offered on BTC-TC regularly go without a bid. 

Any suggestions on how to increase traffic/volume in this area of BTC trading?

If you don't want coins kept locked up but you don't mind shares locked up, be able to offer shares as collateral to the exchange against the coins that are promised to the buyer if they exercise the option.

Or, have an option to let the exchange lend the coins out for interest (eg. to coinlenders.com) instead of having them just sit there gathering dust till the option expires.

It's worth .25 BTC based on what?  That may be a reasonable number but you need to provide some backing not just your opinion stated as if it's fact.

The economics of the trade are debatable.  However .1BTC premium on 1.8BTC strike expiring Aug 30 (what is currently available on BTC-TC) is a 5.5% premium for 3 months (22% annualized without compounding) a solid nominal return.

Based on black scholes... with 45 day implied volatility of the stock + estimate of .017ish average div.

Does anyone have any reading material or sources about the OP's topic that would be relevant to investing in BTC?

Stock was trading at about 150% volatility before it got stuck at 2.5

hard to quantify now but technicall its now 100%

just using the same option pricing mechanisms as wall st.

Thank you for citing a source, we can debate the usefulness of Black-Scholes separately (implied vs realized volatility for instance) but I appreciate you offering some stat backing

I've only gotten one acceptable offer for options so far, so I'm going to raise the premium a little bit. This is firm: do not bother asking for a higher premium/shorter time period/whatever.

I will immediately purchase ASICMiner puts expiring September 1st, with a strike of 1.8BTC, and a premium of 0.14BTC.

3 BTC limit.

Hey all,

I'm still buying about 7 more ASICMiner-PT put options.

Strike: 2.3 BTC
Exp: ~90 days
Premium: 0.2 BTC

(again, I am buying puts, you would need to write them)

BTCT please. If you decide to list, make sure to send me a PM.

Cheers,

Vycid

I've never bought or emitted options so far, but the offer is interesting and I'm considering it.
btct offers 84d (i.e. 12w) options.

However I've made some calculations (https://docs.google.com/spreadsheet/ccc?key=0AugDlPDAJBuAdDVPd0dQOFpvdTk3UGhOaU43UENjQUE&usp=sharing), and locking 2.3 BTC for a 0.2 premium equals to a weekly gain of 0.01666667, which I think will be lower than the dividend that AM will pay during this period (assuming 0.0290 weekly dividends, that would be 0.01957273 adjusted to what I could buy now with 2.3 BTC), so I could as well buy some AM-PT shares with those coins and have a higher return.

Would you accept either:
 • 84d, 2.3 strike, 0.28 premium
 • 56d, 2.3 strike, 0.16 premium
?

Sorry, no. 0.2 is already a significant premium increase from where I was selling before (0.14). There are a lot of people who are VERY bullish on ASICMiner and don't seem to mind at all promising to buy cheap shares from me.

84 days @ 0.20 is acceptable though (since there is no way to write options for exactly 90 days on BTCT)

What I WILL consider is buying unsecured puts, but you must be a trusted community member and willing to sell at a discount.

How do I write puts on BTCT?
I don't see a way to do it. Can someone provide a little guidance?

You can use betsofbitco.in site for that (not affiliated).

No problem!
However, please take no offence, but I don't understand why I should invest in selling puts when just buying more shares at current price will earn me more dividends...
Am I missing something?

Ok there is a little bit of diversification, but not so much, since after all the security is the same one...

You click on the security, you go into the "options" tab, and at the bottom there is a collapsed table "Write Options — Please make sure you know what you're doing before writing options...".

If there isn't it might have to do with, I don't know, 2FA maybe?

Puts are for people who have bought all they want at current prices but would buy more if the price comes down, and are more than happy to get paid in exchange for promising to do so.

I don't get it. Why not just wait until the price goes down and then buy? Wouldn't this be the same?

I would like to buy down, but if I have to keep the strike money locked, I would better invest it now instead...

No. I pay you for that promise (0.2 BTC).

In other news, this train has left the station. Price is at 3.9 so I'm now asking for a minimum strike of 2.7.

Considering I'm offering significantly better than the interest rate, you could always borrow money to escrow.

Or if you're a trusted community member we can work something out.

Update:

(I am BUYING put options: you write them!)

Strike: 3.3 BTC
Expiration: 90 days
Premium: 0.3 BTC

I will honor this is up to a 4.7 BTC/share price level unless I state otherwise. BTCT only.

Vycid

This calculation assumes that the share price doesn't fall at all after you've purchased. If you make x in dividends from holding ASICMINER shares for 12 weeks, then you only earn this full amount if the share price doesn't fall. Otherwise the capital loss (buying_price - selling_price) would eat at your profit.

If you think the share price won't fall in the following 12 weeks, you can make the same amount of money right now, instead of over a period of 12 weeks, by offering 12-week put options with a strike price of the current ASICMINER price and a premium of expected_average_dividend*12.

So if you think 0.04 BTC/week is a high average dividend (I think it is), then you should be willing to sell 12-week put options for 0.48 BTC per contract with a strike price of 4.24 (current ASICMINER-PT highest bid).

If you do this you could buy 1 extra ASICMINER share, and increase your profit further, if the share price doesn't go down.

So in essence you'd be getting an instant, locked-in profit in exchange for a lack of profit in case the share price increases.