*Unofficial* ICBIT (BTC Futures Trading) - Help & FAQ's

[jago25_98]

Stop hunting is completely endemic in the forex world. It must be expected here too. The only thing to do is walk away from all trading until transparency is achieved - producing the trade ticket receipt from a straight-through broker.

More motive for Bitcoin enforced contracts and decentralised exchange. People are broken so we are replacing them with robots.

[davidgdg]

I have a question about fees.

ICBIT say this regarding the BTC/USD-9.14 contract:

"0.0002 BTC for 1 contract trade or settlement. Subject to change."

Does this mean the only fees I ever pay to ICBIT are 0.0002 BTC (about 10 cents) when I open a trade and the same when I close it?

[samsonn25]

I have a question about fees.

ICBIT say this regarding the BTC/USD-9.14 contract:

"0.0002 BTC for 1 contract trade or settlement. Subject to change."

Does this mean the only fees I ever pay to ICBIT are 0.0002 BTC (about 10 cents) when I open a trade and the same when I close it?

Then they say there is a twice a day holding fee:

FEES

Each trading instrument will operate one of two fee models:
Lower transaction fees, but a twice-daily holding fee per contract applied at clearing (designed to encourage day-trading)
Higher per-transaction fees, but no holding fees (designed to support longer term trades)

Per transaction fees are calculated in BTC and are chargeable at the point of contract purchase/sale, therefore each position will incur fees twice (open and close).  Fees are charged according to the quantity of contracts being bought/sold, so whilst the fee is not displayed prior to purchase, it can be calculated by multiplying the quantity by the fee (and double if you also need to consider closure fees).

Actual fees are listed on the instrument reference pages (e.g. https://icbit.se/BUH4) and vary per instrument, usually with lower fees on contracts which are furthest form settlement.

Update 01/04/13: Fee discounts based on trade volume - fee discounts are now applied based on trading volumes, so if you trade a lot your fees will be lower - as outlined here: https://bitcointalk.org/index.php?topic=50817.msg1717445#msg1717445

[davidgdg]

I have a question about fees.

ICBIT say this regarding the BTC/USD-9.14 contract:

"0.0002 BTC for 1 contract trade or settlement. Subject to change."

Does this mean the only fees I ever pay to ICBIT are 0.0002 BTC (about 10 cents) when I open a trade and the same when I close it?

Then they say there is a twice a day holding fee:

FEES

Each trading instrument will operate one of two fee models:
Lower transaction fees, but a twice-daily holding fee per contract applied at clearing (designed to encourage day-trading)
Higher per-transaction fees, but no holding fees (designed to support longer term trades)

Per transaction fees are calculated in BTC and are chargeable at the point of contract purchase/sale, therefore each position will incur fees twice (open and close).  Fees are charged according to the quantity of contracts being bought/sold, so whilst the fee is not displayed prior to purchase, it can be calculated by multiplying the quantity by the fee (and double if you also need to consider closure fees).

Actual fees are listed on the instrument reference pages (e.g. https://icbit.se/BUH4) and vary per instrument, usually with lower fees on contracts which are furthest form settlement.

Update 01/04/13: Fee discounts based on trade volume - fee discounts are now applied based on trading volumes, so if you trade a lot your fees will be lower - as outlined here: https://bitcointalk.org/index.php?topic=50817.msg1717445#msg1717445

Thanks. It is still all a bit obscure. Do you know if the holding fee is different to the opening/closing fee? And how much is it?

[samsonn25]

I dont know. It is very vauge.

Im sure they have to make money somehow either by trading fees or making a spread.

I wanted to trade weekly options before but they are only have monthly.

[Fireball]

Hello,
we don't have any instruments which incur the overnight holding fee now.

As for the trading fee - it's fixed, per 1 contract per 1 operation.

For example, you buy 5 May contracts at $500, and then sell all of them at $600 (let's be optimistic :-)).
Then you would be debited 0.0005 BTC after you bought the contracts (0.0001 BTC trading fee * 5 contracts). Then when you sell them, you would get 0.0167 BTC of profit credited to your account and again 0.0005 BTC debited for the sell transaction.

Please don't hesitate to ask more questions!

[davidgdg]

Hello,
we don't have any instruments which incur the overnight holding fee now.

As for the trading fee - it's fixed, per 1 contract per 1 operation.

For example, you buy 5 May contracts at $500, and then sell all of them at $600 (let's be optimistic :-)).
Then you would be debited 0.0005 BTC after you bought the contracts (0.0001 BTC trading fee * 5 contracts). Then when you sell them, you would get 0.0167 BTC of profit credited to your account and again 0.0005 BTC debited for the sell transaction.

Please don't hesitate to ask more questions!

So for any future position, irrespective of size and duration, the only fee I pay you is a few cents to open and close the contract. That seems too good to be true 

[samsonn25]

It has to be the spread.

For ICBIT

5.14                   528       526            532          If you bought the contract at 532 and current value was 528 you are behind $4.  If you wanted to sell it price is 526 for 528 last sale.

6.14 contract at $540  Bid 520 and ask 554


I trade equity options at TD and OH.  At Optionshouse is $8.50 plus .15 contract which is one of the lowest rates.

[davidgdg]

It has to be the spread.

For ICBIT

5.14                   528       526            532          If you bought the contract at 532 and current value was 528 you are behind $4.  If you wanted to sell it price is 526 for 528 last sale.

6.14 contract at $540  Bid 520 and ask 554


I trade equity options at TD and OH.  At Optionshouse is $8.50 plus .15 contract which is one of the lowest rates.

But I don't think they make money on the spread. That's just the consequence of a thin order book isn't it?

[samsonn25]

It has to be the spread.

For ICBIT

5.14                   528       526            532          If you bought the contract at 532 and current value was 528 you are behind $4.  If you wanted to sell it price is 526 for 528 last sale.

6.14 contract at $540  Bid 520 and ask 554


I trade equity options at TD and OH.  At Optionshouse is $8.50 plus .15 contract which is one of the lowest rates.

But I don't think they make money on the spread. That's just the consequence of a thin order book isn't it?

Haven't looked into it 100%.  But normally option contracts are 100 units per 1 contract. I could imagine if you bought and had to sell or vice versa before expiration or on that day those dollars add up because most dont want to or have the actual funds to fulfill the contract settlement in actual btc.

[Fireball]

But I don't think they make money on the spread. That's just the consequence of a thin order book isn't it?

In ICBIT trading platform the market is freely accessible to anyone. So anyone can issue orders and make the spread tighter, or consume orders and make the spread larger (as much as arbitragers allow it to).

So yes, we do not take a percent of your profit or loss, instead we take fixed value for a transaction. This is de-facto standard in any futures contracts market.

[thetedderbear]

I'm trying to wrap my head around how the $10 chunks work and how the futures execute... Probably a noob question but I'm lost and can't seem to figure it out no matter how much reading I do.

So say I'm selling a contract for 1BTC for $700, instrument 6.14. So if I'm correct, on June 14, 2014, the buyer of my contract will not pay me USD (since everything is in BTC), but in BTC. Correct?

Now, here is where I am lost. On the settlement date, with a normal future, I would turn over 1BTC in exchange for $700USD, even if the value of 1BTC is now only $600. In this scenario, the buyer has lost $100, in the form of overpaying for 1BTC. But since all contracts are settled in BTC on ICBIT, would the buyer pay me in $700 worth of BTC, at current market value? In my proposed scenario, ~1.166BTC?

On the flipside, if the market value of 1BTC goes up to $800, what happens? Do I still deliver 1BTC in exchange for only $700 worth of BTC, in this case ~0.875BTC?

How do the chunks play a role? The whole setup is confusing me and I really would like to understand so I can trade BTC futures.

[Super T]

So say I'm selling a contract for 1BTC for $700, instrument 6.14. So if I'm correct, on June 14, 2014, the buyer of my contract will not pay me USD (since everything is in BTC), but in BTC.

When you sell 1 contract, you are not selling 1 BTC, you are selling $10 of BTC (at the price specified).

So if you want to create a position equivalent to -1 BTC, and the current trading price is 700, you need to sell 70 contracts (70 x 10 = 700, give or take a little for fees etc).

You then have a floating position of $700 worth of bitcoin, against which you will accumulate profit or loss, if the price halves and $700 buys twice as much bitcoin at expiry, then you will pocket the difference (in bitcoin).

You will see yet net value of your position fluctuate on a daily basis as the ICBIT price for that instrument fluctuates. If you hold to contract expiry you will see the ICBIT price converge with the settlement spot price (e.g. Bitstamp) in the weeks/days before settlement.

Make sense? If not the best way to learn is just buy sell 1 or 2 contracts and see what happens, you'll soon get a feel for it.

[Fireball]

Yes, Super T's explanation is right.

Each contract is for $10 (that's how it works if we want to account contracts in bitcoins). When you deposit your bitcoins to ICBIT you just move your long position in bitcoins to our site. Now, you can use this money to either increase your long position by buying contracts - effectively this means you're opening a short position in US Dollar (dollar falls - you get more bitcoins). Or, you can "sell" your long position and move your funds into "virtual dollars" (which are same contracts, if you sell them) and buy them back when the BTC price falls.

[chris45215]

I want to do arbitrage with this website, but the pricing structure needs to be cleaned up.

First, everything should keep the same unit, or at least have a display that is in the same unit. Or, at the very least, the units should be identified.

Here is an example trade in the UI:
Quantity: 59 (59 what? Bitcoin? Dollars? No, it's 59 sets of $10)
Price: 590 (So here we're using units of $1, rather than the $10 used in the above item)
Margin to buy: .2827 (.2827 what? Dollars? Units of $10? No, it appears to be .2827 BTC)

Each of those three items are in different units. There is no reason for this whatsoever. The lack of units on the UI is inexplicable when the pricing mechanism is this over-complicated already.
For all the user can tell, the margin is NOT .2827 bitcoin, but rather $0.2827 per $10 contract, because those are the units that have already been used in the UI.

[Keyara]

I want to do arbitrage with this website, but the pricing structure needs to be cleaned up.

First, everything should keep the same unit, or at least have a display that is in the same unit. Or, at the very least, the units should be identified.

Here is an example trade in the UI:
Quantity: 59 (59 what? Bitcoin? Dollars? No, it's 59 sets of $10)
Price: 590 (So here we're using units of $1, rather than the $10 used in the above item)
Margin to buy: .2827 (.2827 what? Dollars? Units of $10? No, it appears to be .2827 BTC)

Each of those three items are in different units. There is no reason for this whatsoever. The lack of units on the UI is inexplicable when the pricing mechanism is this over-complicated already.
For all the user can tell, the margin is NOT .2827 bitcoin, but rather $0.2827 per $10 contract, because those are the units that have already been used in the UI.

Yes. The pricing need to be cleared up.

Also standardized it would help. For instance, 1 unit == 1 bitcoin rather than 10% of it.

[Fireball]

I want to do arbitrage with this website, but the pricing structure needs to be cleaned up.

First, everything should keep the same unit, or at least have a display that is in the same unit. Or, at the very least, the units should be identified.

Here is an example trade in the UI:
Quantity: 59 (59 what? Bitcoin? Dollars? No, it's 59 sets of $10)
Price: 590 (So here we're using units of $1, rather than the $10 used in the above item)
Margin to buy: .2827 (.2827 what? Dollars? Units of $10? No, it appears to be .2827 BTC)

Each of those three items are in different units. There is no reason for this whatsoever. The lack of units on the UI is inexplicable when the pricing mechanism is this over-complicated already.
For all the user can tell, the margin is NOT .2827 bitcoin, but rather $0.2827 per $10 contract, because those are the units that have already been used in the UI.

Until the UI is improved more significantly, I added units to some confusing places. Please check it out.

[samsonn25]

Yes, Super T's explanation is right.

Each contract is for $10 (that's how it works if we want to account contracts in bitcoins). When you deposit your bitcoins to ICBIT you just move your long position in bitcoins to our site. Now, you can use this money to either increase your long position by buying contracts - effectively this means you're opening a short position in US Dollar (dollar falls - you get more bitcoins). Or, you can "sell" your long position and move your funds into "virtual dollars" (which are same contracts, if you sell them) and buy them back when the BTC price falls.

Couldnt you use your btc long position to sell future contracts?  Say sell the Dec 14 contracts now at $726.     the premium is?

[Super T]

[/quote]

Couldnt you use your btc long position to sell future contracts?  Say sell the Dec 14 contracts now at $726.     the premium is?
[/quote]

Yes of course, and many do.

[thetedderbear]

So say I'm selling a contract for 1BTC for $700, instrument 6.14. So if I'm correct, on June 14, 2014, the buyer of my contract will not pay me USD (since everything is in BTC), but in BTC.

When you sell 1 contract, you are not selling 1 BTC, you are selling $10 of BTC (at the price specified).

So if you want to create a position equivalent to -1 BTC, and the current trading price is 700, you need to sell 70 contracts (70 x 10 = 700, give or take a little for fees etc).

You then have a floating position of $700 worth of bitcoin, against which you will accumulate profit or loss, if the price halves and $700 buys twice as much bitcoin at expiry, then you will pocket the difference (in bitcoin).

You will see yet net value of your position fluctuate on a daily basis as the ICBIT price for that instrument fluctuates. If you hold to contract expiry you will see the ICBIT price converge with the settlement spot price (e.g. Bitstamp) in the weeks/days before settlement.

Make sense? If not the best way to learn is just buy sell 1 or 2 contracts and see what happens, you'll soon get a feel for it.

Thanks for this, I just now read it and I've finally wrapped my head around it a little better. Made myself a spreadsheet in excel that helped me visualize it all.

A few more questions:

This is probably really stupid but I would rather know for sure than not. So the orderbook displays currently open orders, so "Buy" orders listed there are open buy's from other users, to whom I could sell contracts? Or do I have it backwards.

Also, so given that a Buy order is listed there, ex. 250 contracts with a price of 660. Given that I understand my above question correctly and that is in fact an order I can sell to, would I have to sell 250 contracts at 660 to match up with that one? Or if I only sold 150, would it execute for me and only partially execute the other users order, leaving him or her with an open order of 100 contracts at 660?

Thanks in advance guys!