Bitcoin Forum

i want to do a bitcoin options service so people can hedge or leverage their investments. does anyone want to help me do this?

I'd be very interested in quoting some options.  PM me if you want to toss some ideas around.

i can help feel free to pm me

you can send me pm for any information  8)

nobody helping most of them wasting time and scaming so beware all of these and do your work with your own mind :D

I'd be looking to help in this. My experience is the following:

-> Programming expert. I can help you code a website if you wish. However, I am not good at designing the look of the website, just the PHP/JS/MYSQL.

-> Large experience in financial field.

-> Just another Bitcoiner bringing to the table his experiences with the unique currency.

PM me with further information regarding how I may partner with you in this enterprise.

No, because a) "this" already exists, done well by people who know shit; b) you're nobody, and without a clue.

i have been doing derivatives for over 10 years now as well as designing frontend systems for sp100 banks. You cannot write option contracts as a market maker without putting up the $ to prove you can payout, nevermind  the software challenges of pricing the premium/vol.

Using a very simple example, you write a $130 strike put contract (size = 1 btc) and try to pocket $15 for the premium, as a buyer i will need to know you can pay me $130 if bitcoin drops to $0 (realistically people will demand at least a 75% cash cover given btc's past price actions). You are nobody, not regulated, not exchange listed. Noone (who's sane) is going to trust you unless you put up the cash in escrow. So for every contract you write you have to be cash covered, just think about how much cash you need and how realistic it is.

Now think about how you are going to hedge those put options, most market makers delta hedge (google it) their portfolio by shorting the underlying to try maintain a net neutral delta position (and often fails to do that during fast price markets as vol explodes - losing money).  Those are professional traders backed by billions of $ in technology and size from the firms they work for.  

Related to above, your third problem - there is no way to short the underlying bitcoins to hedge the put contracts you wrote.

So if you are legit and put up the cash to cover the put contracts you will make no money and likely lose most of it, or you can run a scam and just sell those option contracts pocketing premiums with no intention of ever honoring them if the price hit your strike. Many sell side leveraged hedge funds actually run this type of scam, they will pocket premium for years until a blackswan like in 2008 where massive out the money put contracts they wrote became in the money, then they declare bankruptcy. You may get away with it, or you may have people coming after you in court or police.

On the call side, there is no point. Why would anyone take this kind of counterparty risk to buy calls for a little bit more leverage, they will just buy the underlying bitcoins and be done with it.

This is just scratching the surface if anyone want to do a real bitcoin options exchange not just a few contracts posted on the forum,  it's not very feasible without significant funding and experience behind it.

I don't see this offered anywhere that has decent spreads and volume.

Did you even search?
There are several websites doing it like https://1broker.com/

Your immaturity in your responses will keep me away 100%. My guess is you're 15-20, think you know your stuff and are trying to make what you think is easy money. Personally with the arrogance you've displayed I hope you go broke from your options offers. Stay away people, even tho MPEX may look ugly they'll pay out 20,000 BTC if you truly get that good of an order.

God, I thought MPOE-PR was a bit harsh, but you deserved it. You sound like a stupid 14 year old with an ego problem.

i thought icbit.se was alreayd doing this, however the guys behind it, at least from what i could gather on the forums, do not have traditional options trading platform experience.  it is possible that they have adjusted their platform to align with expectations users may have

note that i also agree that competition is good

How do these operations properly delta hedge with the lack of short selling?

How are you going to create an exchange without mm providing liquidity so anyone wish to buy or sell will always have someone taking the other side. Being a middleman matching buyer/seller will only work in a highly liquid environment, also for options you are asking retails to figure out how to price and calculate premiums themselves without mm.

All you will ended up with will be an empty exchange with a few contracts that have outrageous premiums that will never get hit.

This will be my last post on this subject, just providing some basic info, i would love to have an option exchange for btc, but zeded you are not even in the same universe to execute.  Mtgox is probably the only one in a good position to do this right now.

I think it would work as long as you act as a broker & charge a commission for matching orders, offer a mini contract (not a 100x) maybe 10x or 20x, also you have to only allow btc (no fiat at all). If users can only deposit in btc & they want to write contracts then all contracts are covered and are able to be exercised regardless of how volatile the market is. Users that want to write contracts need to have the coins for the amount of contracts they want to write, that way you have no counterparty risk. Now all you need is a proper pricing model, don't think black scholes will cut it for this type of volatility, but definitely a variation of it.

I'm not sure why you think this, you can use black-scholes to determine price of the premium in usd, then use a calculation off the current exchange rate times price of premium in bitcoins. If a trader is looking to protect a larger position of coins then the exchange rate in fiat really doesn't matter, what's important is that there adding more coins to there bottom line. No reason to think in terms of fiat at all. The same logic should apply to just about any option stragey the trader wants to use, in the end if they pay xxx btc for the premium, whats important is that they get yyy btc more on top if there right.

not to mention avoiding fiat elimates a ton of regulatory hurdles.

1broker does not offer options.  You either misread or didn't bother to read this topic.  I see you have 1,000 posts in less than 2 months so I'm guessing the latter.

That simply means you're kinda dumb. Look harder.


Thinking of the world in terms of "sites" is what keeps the world thinking of you in terms of "that idiot". You sure there's not some homework you're neglecting to do here? Cause doing that homework instead would have an immeasurably more beneficial impact on your future financial security.