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Author Topic: Does anyone care to analyse the options offered at bitoption.org?  (Read 2151 times)
ripper234
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Ron Gross


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June 09, 2011, 04:47:19 PM
 #1

Bitoption.org is active for a week or two now.
I never traded an option in my life, and I'm curious how would seasoned option traders would interpret the data.
Or is there too little data at this point?


Please do not pm me, use ron@bitcoin.org.il instead
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bitoption
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June 09, 2011, 05:27:25 PM
 #2

I'd say there's too little data.

I'm working on a few usability enhancements to bring it more broadly, and I know at least two people are feverishly writing trading bots; check back in a few weeks for some analysis, I'd say.

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
clickbangdone
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June 09, 2011, 07:04:28 PM
 #3

I'd love to buy puts on this turd but you have to trade in turds to do it. So even if I'm right I could still lose.
For that simple reason the game is rigged against bears.
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June 09, 2011, 07:49:17 PM
 #4

I'd say there's too little data.

I'm working on a few usability enhancements to bring it more broadly, and I know at least two people are feverishly writing trading bots; check back in a few weeks for some analysis, I'd say.

If you create a page explaining what means each option, it may as well help. I'm new to trading options!

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Grant
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June 09, 2011, 08:00:44 PM
 #5

I'd love to buy puts on this turd but you have to trade in turds to do it. So even if I'm right I could still lose.
For that simple reason the game is rigged against bears.

Based on your previous posts on this forum, i have to assume by "turd" you mean "BTC".

If you wanna "sell short" the btc, you'll be looking to either write (not buy) a put, in which case you get BTC's NOW which you can cashout NOW to USD and hope that option expires worthless.
Or you can buy deep out of the money call, in which case you can excercise it later to get your USD delivered.

I don't see how that can be labeled as "rigged".

clickbangdone
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June 09, 2011, 08:22:06 PM
 #6

I'd love to buy puts on this turd but you have to trade in turds to do it. So even if I'm right I could still lose.
For that simple reason the game is rigged against bears.

If you wanna "sell short" the btc, you'll be looking to either write (not buy) a put,
What are you talking about.

I've traded plenty of options in my lifetime
When you buy a put you are buying a contract to sell (put) the stock (security) at the strike price of the contract to the person who sold it the contract.

Here's how it's rigged against the bears
If I believe bitcoins are going down in value I purchase a puts

The problem is if I am right and exercise my put contract I'm paid back in bitcoins but what if bitcoins are worthless how can I make any money.

Do you see now how it's rigged against bears 

bitoption
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June 09, 2011, 08:35:41 PM
 #7

There are some confusions here, which it's worth sorting.

You do PAY or get PAID in BTC, but as has been said, you can purchase a contract to receive USD (This would be a call, currently. A BTCUSD call to be specific.)


So go buy a call at .5 BTC / USD.

Step 1: Send us 100 BTC
Step 2: Bid on a BTCUSD call at Strike of .5 in, say, 5 months. Price them at .001 BTC per, and bid on 100,000 of them.
Step 3: Wait for stupid longs to write these calls. They will have USD escrowed.
Step 4: Happily for you, bitcoin drops to $.50 per, or in BTCUSD terms, rises to 2 BTC-USD. Your calls are in the money.
Step 5: Buy 50,000 BTC for $25,000
Step 6: Trade your 50k BTC for $100,000 dollars.

You netted:
$100,000 US
-$25,000  costs to buy cheap BTC
-  $3,000 to buy calls
---------------------------
 $72,000


That is in no way stacked.

On the flip side, someone with the $100k got $3k in interest; I'm thinking options like this need to be offering roughly 15 to 18% returns for USD holders to pique interest, so I'd say that this would be roughly a 2 month timeframe at the suggested price. Of course, as you know, there are many, many variations on this.



----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
clickbangdone
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June 09, 2011, 08:50:15 PM
 #8

That is in no way stacked.
WTF
Sure it's stacked.
How does someone buy a put and bitcoin goes to ZERO make money?
mmdough
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June 09, 2011, 09:20:30 PM
 #9

That is in no way stacked.
WTF
Sure it's stacked.
How does someone buy a put and bitcoin goes to ZERO make money?

If Bitcoin goes to zero, people will happily take $.01 for it.

So long as your strike price is above that you're in the money.

And this market buys and sells dollars, not BTC. If you want to sell btc, that's the same as buying dollars: buy a call on dollars.

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bitoption
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June 09, 2011, 09:24:00 PM
 #10

Re: Puts and $0 BTC

1) Buy a put on BTCUSD; you are going to put USD on someone in exchange for BTC.
2) Bitcoins go to $0
3) You will not make money, you bought the right to sell USD for bitcoins.


Since underlying is USD, you want a call if you are short BTC.

Note, I am considering reversing this mechanism, that is making the default USDBTC, since there are a LOT of questions and confusion about it. TO be clear: a put on USDBTC is a call on BTCUSD.


----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
mmdough
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June 09, 2011, 09:35:43 PM
 #11

Re: Puts and $0 BTC

1) Buy a put on BTCUSD; you are going to put USD on someone in exchange for BTC.
2) Bitcoins go to $0
3) You will not make money, you bought the right to sell USD for bitcoins.


Since underlying is USD, you want a call if you are short BTC.

Note, I am considering reversing this mechanism, that is making the default USDBTC, since there are a LOT of questions and confusion about it. TO be clear: a put on USDBTC is a call on BTCUSD.



What was the rationale behind using BTCUSD? I seem to remember there being a good reason, but I can't remember what it was.

P.S. clickbangdone, if you really want to be short BTC, I will write those contracts. You'll have to pay me in turds though.

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clickbangdone
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June 09, 2011, 09:37:06 PM
 #12

Re: Puts and $0 BTC

1) Buy a put on BTCUSD; you are going to put USD on someone in exchange for BTC.
2) Bitcoins go to $0
3) You will not make money, you bought the right to sell USD for bitcoins.


Since underlying is USD, you want a call if you are short BTC.

Note, I am considering reversing this mechanism, that is making the default USDBTC, since there are a LOT of questions and confusion about it. TO be clear: a put on USDBTC is a call on BTCUSD.


Reverse the mechanism I'm sure it will help your business
Hans0
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June 09, 2011, 10:13:34 PM
 #13

I KNEW derivatives would come! lol
bitoption
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June 09, 2011, 10:22:20 PM
 #14

Yes, this is my take, too, on reversal.

It actually would not be hard to do, just waiting for a little more feedback.


----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
Yequan
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June 10, 2011, 09:20:42 AM
 #15

You will find either written a say in this case you get BTC now, you can now cashout dollars, and that the option expires worthless....

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bitoption
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June 10, 2011, 02:51:54 PM
 #16

Update, the market has been flipped and now works like it should.

I wrote a $45 July 28 call for some enterprising soul to pick up. You give me $3 per call and you can buy BTC at 45 anytime before July 28.

I remain hopeful that shorts will come and play; that's a mildly short contract, but it requires BTC.

Dear BTC shorts, come on and put your money where your mouth is!

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
TTBit
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June 11, 2011, 02:54:49 AM
 #17

Someone can put up 1.00 BTC, sell the 12/29/2011 100 call and receive $6.70 in their MtGox account.  If the price rallies to $95 per coin, they keep the 1.0 BTC and the $6.70?

Or sell 5 of the 12/29/2011 $50 calls, put up 5.00 BTC and get $9.0 each ($45 total), which you can use to buy ~2.0 btc at mtgox at $22.50 each? Can you use the funds right away?

good judgment comes from experience, and experience comes from bad judgment
bitoption
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June 11, 2011, 04:24:51 AM
 #18

TTBit,

Yep, anything you make selling is yours right now.

The underlying is of course locked off until end of contract.

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
bitoption
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June 11, 2011, 04:30:12 AM
 #19

Here's my initial analysis:

We're starting to see some volume today, and lots of interest. Expect tighter spreads over the weekend, as people get used to the new setup.

Right now, longs are totally ruling this market; You can get paid $6.70 for a $100 Dec-29 call, at least, for 4 BTC of them. That's impressive, and I think I might go write those calls as soon as I'm done with this post.

Contract Volumes are stil super low; people are figuring out how to use the system, and what they want to do. June 30 $50 bids are priced at 70 cents; that's .7 / 20 * (365/20) = roughly 64% implied annualized interest / risk premium if BTC stays under $50 for the next 20 days. Seems like a sweet deal to me.

There are very, very few puts listed. I'm not sure where the mega shorts are yet, perhaps they don't know about the exchange. Perhaps they prefer to complain on the boards?


----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
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