Hey Demonofelru,

You can send us USD through Mt. Gox' send USD, and we will (manually) send you out USD using the Mt. Gox send cash-to-an-email functionality. Just email me at admin@bitoption.com.

I think TTBit was suggesting that adding liquidity, e.g. making a new offer, perhaps making the best current offer (bid/ask) is rewarded with a 0 commission status. Buying such an offer is charged commission, but I'd like to make sure I understood how he thinks of it.

sounds like a session bug.

I've got it on the list, will keep you posted.

So TTbit, how do you suggest we implement the commission-free side of things? I am totally willing to do it. Normally I think of Market makers as getting a cut in exchange for keeping up some minimum volume and spread commitments.

Suggestions?

So, I understand the bidding with what you don't have argument, but that system can be abused by griefers easily. Nefario recently took GBLSE down over this behavior: offers to sell 9999 shares of a security; unfunded, couldn't actually execute on them, but... bad for market analysis and annoying to people trading.

I took the approach that every bid/ask is a firm offer, and funded. I think we'll stick with that for now.

Re: Bidding; I agree, it takes too long. I'm not sure why; will look into it.

Re: Deposits, since we piggy-back on Gox' system, for now, we have to use it. But I agree it's annoying!

Re: Sessions, that's bugging me too. It should be set to like 4 hours. I updated a configuration item. Sessions should now last a really long time.

Hi Damien,

Welcome!

You need the right currency to exercise, but you could rinse/repeat/cycle if you only have enough to do one at a time; so, exercise one, sell BTC, exercise one (or two), repeat.

We may eventually allow netting, but I need to make sure that the exchange doesn't take on exchange risk doing that.

Enjoy, and happy trading!

These are good thoughts. We could also do a simple 'cancel if under / over' essentially a stop-loss for bids and asks.

I'm getting deafening silence from my python websockets client today. This is sad, since I use it to give pricing cues on bitoption.org; I've noticed some websockets-gox stuff is working right now, some is not.

Any indications as to what's what and why?

I won't tell you to buy options, but I can tell you that the current options market seems wishy-washy on the idea of $30. You could maybe make a buck or two if it hit $30, but there's not a strong trading perspective that says they won't get there.

Fellow Option traders, I've been watching the market for a bit now, and have come to some conclusions:

1) I'm having a lot of fun! I hope you are as well. I have written and purchased some nice options, and enjoyed it immensely.

2) Liquidity, it's a problem. We're still early days, but I am thinking hard about this, and have some thoughts and questions below.


So, liquidity. There are three ways that I can think of to increase liquidity:

A) Increase number of trading partners
B) Increase desirability of underlying
C) Limit number of ways to buy underlying

I'd like some feedback as to which of these I should approach next: I have a proposal for each.

A) As far as increasing number of trading partners, the best thing I think I could do would be to open source a market-making bot; it would use some very basic math to place trades. Everyone would be welcome to download and use. Because the BTC is SO volatile, it's really hard to post orders and leave them out there. The 24/7 market thing makes it worse, too; it could be midnight GMT when the bad shit goes down. No fun. This means that if you want to buy / sell a few options, you're essentially going to be fill-or-kill on them; you shouldn't let them float out there for long without a computer to mind them for you. So, this would enable you all to be that market-making sort.


B) With this sort of volatility, I hate to say it, but American options stink. European would probably let everyone sleep a lot better, as far as I can tell, and be a lot easier to value. I think this would increase everyone's interest in having them, (and of course, you could still daytrade them if you wanted!)

Secondary thought here - the market still needs to allow you to resell your contracts, this would help as well, but doesn't address the big picture.


C) We can get more depth by shrinking the number of possible lines that can be traded. I am considering $5 increments and monthly right now.

I have also been working on an hourly /daily binary market, so that could help people make short-term swing bets if they liked, while keeping the (hopefully) more useful larger market for what it's intended: hedging risk and wild speculation.

Please give feedback here!

Thanks!

Thanks for the update. Yes, we rely on Gox, and should have better error messages there. Sorry if it was an untimely difficulty. Kind of a crazy trading day today!

Canceling and Exercising is up and running; login and click "My Contracts."

(Did I really sell $45 july 28 calls a couple days ago? Wow!)

OK,

If you login and click "Contracts" You should see a list of all active contracts and open contracts, you can exercise / cancel them, (depending on if they're active or open).

I have slightly better error warnings put in in a few places.

Re-listing options will happen soon, through the /contracts page, you'll be able to 'sell' an obligation.

Nope.

That said, VWAP on Gox is easy to calculate using the websockets interface. You could even introduce some simple time decay if you wanted to get fancy.

Hi all,

I'm working furiously on the following things:

1) Listing Active Contracts
2) Hooking up exercising to the web interface
3) re-listing your options for sale

@nrd52, I think what you should do is bid on cheap puts. You can send me USD via mt. gox' send USD interface (to admin@bitoption.com) and you'll never have to touch BTC until you decide you want to exercise your puts.

If you bid on puts, we'll just take your cash and transfer, no escrow on your side, no BTC necessary.

As far as the market being thin, it's less thin than yesterday! I'm sure a large volume of bids will help. Gotta start somewhere. You could also advertise your puts; I think that the escrowing means people are more likely to do such a deal than just on rep in the forums. Hope this helps.

I have to hold other mechanics-type conversations for a bit so that I can get things sorted out on the site, sorry!

most options traders use something called Black-Scholes as a baseline for pricing.

I won't comment on how appropriate Black-Scholes is in this case, but I would be surprised if you didn't see some broader orders going in that use this pricing as a metric.

That said, options pricing is tough, in fact Scholes (and one of his buddies, I believe) won the Nobel prize for economics coming up with his options-pricing framework.

I'm still working on making the market work better (just in: check out the new /contracts page, if you're logged in), so I can't say a lot more about pricing right now.

Update, I believe it is working now. A second typo, sorry.

Hit me up on email / google talk, we'll get it sorted.

Just to jump in here; most traders think in terms of VWAP; definitely germane to the bitcoin pricing discussion.

Volume Weighted Average Price; that would be a useful metric to publish, and keep track of.

Good suggestion. I'm currently working on the list of open and active options page, and will be using some logic like this to help people understand what they've got.

As a side note, there's a cheap put in at 6-16 right now; $5 ask, $10 strike. That's $2! Only one, sadly, but someone should probably pick it up.