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I vote for Design Ten by elianite
+1 vote for elianite |
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Exactly as Mobius says.
In addition if I did post the details there would be only one outcome. People would argue as to whether the option premium is too low or too high. People would claim I was an idiot for selling too cheap or that the buyer paid too much or they would still claim that I was making it up. In hindsight it was a mistake to inform the forum that any deal had taken place. There are probably lots of OTC derivative transactions on Bitcoin that nobody is aware of for exactly these reasons.
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I just sold a call option to a forum member. Deal was by private negotiation. It is not that hard.
Curious as to how you all priced the option? What sort of assumptions etc. I am assuming given the unknowns using something like Black-Sholes would not be useful. Thanks, Jack If you are intersted in pricing BTC options, this thread could be a good read for you! https://bitcointalk.org/index.php?topic=557743.0I just accepted a bid. I did use Black-Sholes to check that the bid was reasonable, the problem is working out what kind of volatility to use. Current volatility is lower than historical volatility. So it depends on what you believe about the future volatility of bitcoin. My view is that past volatility is more to do with Gox than bitcoin and Gox is gone thankfully. Also the trade was purely trust based (offered escrow but for the amounts involved the buyer was unconcerned). In the long term this is the only way any business can be sustained. Look at services like "spendbitcoins" he has been going since very early days and never ripped anyone off. I would be confident to make a million dollar trade with him because of his record. I would be willing to take the risk of a small trade with someone new to see where it goes and in that fashion one can build trust over time. Any scam involving options can only last until someone tries to exercise. So as long as people are trading relatively short dated contracts a scam would not be able to be sustained. The main issue is the risk that an option writer dies or goes broke and that is where collateral and escrow will become important. I would be very surprised that the buyer would decline escrow for this kind of transaction unless the call option was for well under 1 BTC. The buyer would not only need to trust that you would honor your agreement, but also trust that you would not just keep his $1,100 or however much money (per BTC) when he sends it to you when he exercises his option. He is making false claim for a deal. He needs to post the blockchain transaction and deal to prove otherwise. How much BTC would you be willing to bet that the claim is false? |
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I just sold a call option to a forum member. Deal was by private negotiation. It is not that hard.
Curious as to how you all priced the option? What sort of assumptions etc. I am assuming given the unknowns using something like Black-Sholes would not be useful. Thanks, Jack If you are intersted in pricing BTC options, this thread could be a good read for you! https://bitcointalk.org/index.php?topic=557743.0I just accepted a bid. I did use Black-Sholes to check that the bid was reasonable, the problem is working out what kind of volatility to use. Current volatility is lower than historical volatility. So it depends on what you believe about the future volatility of bitcoin. My view is that past volatility is more to do with Gox than bitcoin and Gox is gone thankfully. Also the trade was purely trust based (offered escrow but for the amounts involved the buyer was unconcerned). In the long term this is the only way any business can be sustained. Look at services like "spendbitcoins" he has been going since very early days and never ripped anyone off. I would be confident to make a million dollar trade with him because of his record. I would be willing to take the risk of a small trade with someone new to see where it goes and in that fashion one can build trust over time. Any scam involving options can only last until someone tries to exercise. So as long as people are trading relatively short dated contracts a scam would not be able to be sustained. The main issue is the risk that an option writer dies or goes broke and that is where collateral and escrow will become important. |
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Woh..it was such a great post. People like me can learn so many things. Everything is described properly here. You must have deep knowledge about the subject.
It is sometimes hard to read all the posts but congratulations to you if you did Inflation is probably 5-10%/year in the US at the moment and heading higher, protect yourself and your family! Current US inflation is approximately 2.1% |
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I just sold a call option to a forum member. Deal was by private negotiation. It is not that hard.
Mind posting the deal in detail? You don't have to disclose the name of the person. +1 on this. Deals like this should really be done out in the open. It would give greater transparency and allow for the community to get a better understanding of the BTC economy. It is really at the discretion of the client whether or not details are released. I may post implied average volatilities if I end trading with enough people to get a reasonable stat. |
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I just sold a call option to a forum member. Deal was by private negotiation. It is not that hard.
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Can we say that the current bitcoin price is the best predictor of the future price as is the case with other currencies? Has anyone done a serial correlation study or something similar. I saw a quote that daily bitcoin volatility is about 7.6%. So in a year whatever your prediction you should plus or minus 7.6*(365^0.5) percent.
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Apart from the funding and inflation aspect anything that promotes internationalisation may help prevent war. It would be silly for America to have a civil war these days for example, with increasing internationalisation war between countries might also become inconceivable. Bitcoin is an international currency so it may promote internationalisation and reduce war. Maybe
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I am still very much open to writing call options (covered) for shorter terms (at max. 1 month). Just PM me or reply in the other thread and we can work something out.
(will probably only reply tomorrow though)
Covered call is same as naked put. If you are trying to benefit from the interest portion, you can check out ICBIT on future contract. How is a covered call the same as a naked put? |
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I would be an interested buyer (at the right price of course) if it could be done properly. The idea of the full balance of coins in escrow (as per TwinWinNerD's proposal) works. In the options world this is called a "covered call" because you are selling the right to buy an asset which you already hold so your obligation is covered.
Even if the interest is not there yet, it will come. This is a necessary part of any developed financial eco system. It also opens up massive potential for hedging bitcoin to USD for payment processors and companies accepting bitcoin.
Let us know what size call you might be interested in buying and over what time period. I will have a go at pricing the option and if we can agree on a fair value then we can deal or maybe TwinWinNerD and I can take half the action each. |
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Twin,
You are willing to write a covered call - isn't the OP wanting to sell a call?
Aren't you both bearish - on the same side of the trade?
Yes. I wasnt responding to Op but to TheGull Actually I would also be willing to buy at the right price, I am not bearish or bullish per say I just think it is a pity that such a volatile asset as bitcoin does not have an active options market. |
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So taking into account initial feedback I guess I would have to put sufficient bitcoin with an escrow so that the option holder had confidence that the call would be honoured. So as long as the buyer trusts the escrow then it should work regardless of whether people like my name or not.
Does anyone think that people would be interested. If you want to be long bitcoin it may be better for individuals to hold an option, depending on your risk preferences and what you want to use your money for. I would basically be sacrificing my upside but gaining some income now.
I am not really interested in setting up a market or anything so it would just be a private agreement mediated by an escrow.
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Hi All
I wanted to start selling call options over bitcoins.
It seems that people have tried this before and it is not gone well but I see no reason why it should not work if done properly.
Would appreciate input as to why this might be a bad idea.
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my thought is i should be making threads like this to increase my rank on bitcointalk and then reply to everyone about everything regarding anything. just like this post
That would be extremely cynical and annoying, who would do such a thing. By the way Loosing is a much better spelling of losing and should be adopted. Also if by popularity the OP means number of unique addresses then bitcoin is becoming more popular, if the OP is talking about demand for bitcoin at a particular price then bitcoin is less popular. However the price of bitcoin really reflects an asset allocation decision where individual investors are deciding if the asset is over or undervalued, so it does not really tell us anything about popularity. Damn I should have posted three separate messages then I would be a full member. |
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I guess if bitcoin were that easy to regulate than bitcoin would already have been regulated out of existence. If you want a business to hold an asset for you for more than five years then you should buy EFT's not bitcoin. This does however bring up the problem of the unintended consequences of regulation. New York has been proactive which may mean bitcoin develops faster there because of certainty of regulation or may mean NY becomes a bitcoin free zone and business domicile in other places to avoid the inconvenience.
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What will also be interesting will be to see what happens transaction fees become significant relative to mining rewards. The technology cap is interesting cause I wonder where that is? Is it at 28nm or 22 or 16?
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no matter the hashrate and diff, new coins minted per day remain the same in general.
people often think that supply is shorted with the rise of difficulty, but actualy its the same, just more spread out between miners.
more interesting thing to talk about is next halving, if that doesnt move the price way up, nothing will.
It seems that there's no use in even trying to explain this to people on this forum. Not to mention all of the "price will follow hashrate" comments. But please, yes - all of you should go buy more coins right now because the hashrate is continually rising. I have tried to explain the same thing. From a market (price) point of view it does not matter if 100 Ghash/sec produces that 25 BTC/block or 100 Phash/s does it. They are the same 25 BTCs, so, no, more hashrate does not mean higher price. It is the opposite, if price goes up, more miner turns on their machinery! While the above is all true, it does not take into account that the market for mining gear is a significant one for the use of bit coins. So to the extent that that market is influenced by the hash rate so to will the bitcoin price. Most people understand that the bitcoin supply is not affected by the hash rate. |
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I am not sure if you want to invest in bitcoin due to the rapidly changing prices
Every investment can be volatile, bitcoin is actually less volatile on the down side now than it was when it dropped from 30 to 2 dollars back in the day. It does depend on your time horizon, for instance if you hold property, that market can trend in one direction for decades if you bought tokyo property at its peak you were not going to get your money back. Basically if your investment horizon is more than a couple of years with bitcoin you should be good as long as new people keep adopting it. |
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Us should go all in now. China is holding 4 trillion in Dollar bonds, the US adopts Bitcoin and leaves the Dollar to become obsolete then they are 4t up. But with BTC they would not be able to do that again so party would be well and truly over.
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