Update: We're up, and (I think, looking good).

Are you short bitcoin? You can come take 2 BTC off me by buying me July 28 Calls. They'll expire out of the money if BTC are under $20 US per.

https://bitoption.org

Bitoption charges a 1% fee.

Thanks for listing us!

MAJOR UPDATE It's up.

To get things rolling, I posted 200 calls at .05 ($20) for July 28. I'm offering .01 BTC per.

Shorts; you could have 2 BTC in your pocket in very short order.

I added an FAQ to the site.

Also, undocumented feature: Click the "bid/ask" and it will give you a full listing of the orderbook.

It would, if you thought in USD.

I'd like people to think in BTC. As I said above, this also makes it possible to trade options on other denominations easily. For instance, we could have a EUR underlying easily, whereas if it were the reverse, you'd have to go through two conversions.

Alternately, why should you have to deal with USD-BTC exchange rates if you want to buy calls on SIN, at the GLBSE?

Finally, I think that transacting in BTC is marginally legally safer.

Update, I'm taking the trading down for 12 hours or so and implementing USD as the underlying trade-against currency.

I went back and forth over taking payment in USD (which would solve the non-linear returns problem), or using USD as the underlying, which also solves the problem, but means you'll be transacting in 1/(USD/BTC rate), so right now roughly .057 or so is an at the money strike price.

In the ends, I have two reasons for moving ahead with using BTC to pay and having USD as the underlying.

The first is, of course, that using BTC for sending and receiving payments is really easy (thanks Satoshi!). Right now, we allow you to exchange on Gox in your bitoption lock-box account to get USD. This is so very much easier than dealing with USD payment problems; just send us BTC, request them, it's all automated, and no problem.

The second is that we're in early stages of working with GBLSE (very early) to get options on other listed securities there, and those contracts will all be BTC-for-some-underlying.

Given those, I'm hoping you all will be patient with me and put up with inverting Gox' quoted exchange rate when you figure out what's in the money or not.

Here's how a call would work right now:

You buy a call at .0571 (BTC/USD) strike price for July 28. You pay .01 BTC per call. (1 contract = 1 underlying = 1 USD). This is a 'short BTC/long dollar' trade.

The exchange rate goes to $5USD / BTC, or in our terms .2 (BTC/USD).

Now, everyone else is buying USD at .1 BTC per, but you have the right to buy USD at .0571. Counting the contract price (and ignoring commission), your cost is .0671.

Let's say you got 100 of these: you then spent 6.71 BTC to buy $100 USD. If you like, you can immediately convert back to BTC and get 10BTC; you have hedged against a BTC drop successfully. If you prefer, you can hold onto the USD, of course.

One thing this means is that if BTC keeps strengthening, we'll be dealing with small decimals. On the other hand, if it weakens, we'll be back to using numbers greater than 1. I'm considering using milliBTC as the unit on the site, happy for input (if it's soon!)

Hi all, I'll be keeping track of bitoption up and down notices here.

Back up from our DDOS attack. Hopefully that's it for now.

nrd52, I'm about to release v2.1 of the options market which will let you short using options. https://bitoption.org

(But, wait 12 hours).

People who are long always complain about short selling, and in fact, shorting has a long and storied legal history.

In general it is considered that the ability to provide downward pressure on prices by 'nonbelievers'  generally aids price-accuracy to underling value.

I certainly think that it would be nice if shorts could get in this game, and would guess that there would be less short-term fluctuation in prices.

bitoption is 100% escrowed; your coins / USD will be lockboxed until and option expires or is exercised.

I think that their simplicity would appeal to a large segment of the market here.

I'm imagining hourly , daily , weekly, monthly, (yearly?)

Hey hazek, email me at admin@bitoption.com with login info and I'll get you sorted.

Forgot password should be working in the next day or so.

I think the binary options would appeal to a lot of people; my first step is to make sure I can do USD-denominated.

bitoption is all escrowed, by the way, the trades are guaranteed.

Hello BTC_Bear, I hope you come trade with all the bulls!

Our commission structure:

On a crossing: 1% from each party

If you want to become a value-added provider, say with a great website which streams quotes, and allows people better features than our humble one, you can charge a commission, whatever you like, up to 10%. You choose.

We will take 20% of the commission you choose; that's our way of paying for supporting third-party API developers. Of course, you con't have to charge anything.

So, in short, it's 1%.

I really like the binary options idea; I believe it will be easier to understand and trade for people. I'll have to look into how it could be implemented.

So, more options posted will help things a little, but, also we clearly need an FAQ. I'll respond here, and work up to getting a good one.

To describe I'll choose a July 28 bid currently on the site:

Call: Price .005 Strike 20

This is a bid, so someone wants to buy something.

They want to buy a call; a call is the right (but not obligation) to buy at a future date (in this case, any time before July 28)

The price they are agreeing to pay if they exercise the call is $20USD.

They are willing to pay .005 BTC for this right.

So, this is a bet from someone who thinks that it is likely that BTC will be a bit over $20US before the end of July. If bitcoins go to $21 US, they will have paid .005 BTC now (roughly 7 cents US), and they will make $1, so they'll net $.93 USD on their trade.

If, on the other hand, BTC never goes over $20, they will have lost their 7 cents.

A few people might be interested in this call, although perhaps not at this price.

So, let's say you like bitcoins but think $20 will never happen by July; it's too much to imagine. In this case, you could  "write" this call, and pocket the .005 BTC for every contract you successfully write.

What does that mean? that would mean you'd put in 1 BTC for every contract you want to write, then you'd "ask" or "write" the call july 28 $20. Now, let's say you're happy with .005 BTC as a price; it's like free money to you, and you hope you sell a thousand of them, then August 1, you'll do it again, making nice bank on your BTC stash.

You would "ask" .005 BTC for a July 28 $20 call. Bitoption will clear that against the bid. At that point, you have sold an option contract. We mark you as obligated for 1 BTC, and don't allow you to remove it until the call expires or is executed.

You would get .005 BTC transferred to your account, less our fee (1%, min fee .0005 BTC, so in this case, you would get .0045 BTC).

Now, perhaps you like this idea, but you think .005 is too low. You want more back. you could "ask" for a higher price in exchange for locking off your BTC till july. Maybe .1 BTC; perhaps someone will pay that! You would then ask .1BTC for july 28 $20 call. Our form would show, on the left, a bid of .005 and an ask of .1 . You'd then wait until someone came along and either narrowed the bid/ask spread with a new bid, or bought.

Hopefully this helps.

In answer to your 'how many?' question, it's a really good question. Normally market makers fill out these option books, and people buy a few contracts at a time, but each contract equals 100 shares of an underlying. You'd buy one or two, check price, buy more, I guess. In our case, we're an open book trading system, so we're willing to show the whole book, and in fact, you can get it through the API, but it's actually a lot to display through the web interface.

What I'm likely to add is a hover on a given row so that you can see the whole book for that particular contract type. I'm open to suggestions about display.

Hope this has been helpful!

If you're long BTC right now, probably you want to throw out some call bids and see what happens. If you're short, you might want to make some put bids. It would be nice to sell BTC at $20 end of July if you think they'll implode, right?



 

These are all great questions.

So, we probably should halt trading (but not execution) a bit before. I'm happy to take thoughts on this.

Re: auto-execution, I had planned on this being a third-party service, but I'm open to 'auto-execute' if people wish.

One possibility, if you have in the money naked puts, say, is that you may well move the market to out of the money as you execute them. This sort of thing made me think it would be better to let people execute on their own.

I'm planning on adding a third tab to the right side with a list of your options and the choice to execute, should be together soon.

Re: time and date, I'll put up a URL and post on the site so that you can be up to date.

Re: expiration, some time shortly after expiration, non-executed contracts will be deleted, this will free up any funds locked as well.

A few more plans:

On reflection, I do plan on moving to USD-pricing, the system has an 'underlying' security system built in, and I will try and re-work this to use USD. We'll either keep BTC-pricing alongside or sunset, depending on market demand, but I anticipate we'll "lead" with the USD-denominated at some point. This is at least a month away.

On contacting me: admin@bitoption.org


https://bitoption.org/help has API documentation.

You need a different client. I would expect this to get amended in the next release; it's broken as-is: that behavior is inappropriate, although agreed on here in the forums.

So true, so necessary. /help has somewhat detailed information, but not a tutorial.

And, it's up: https://bitoption.org

It's up at https://bitoption.org

(Beta)

Update, https://bitoption.org has launched. It's in beta.

Update, it's launched, come check it out.