[WTB] 10BTC AMC European Call Options

[Surprise]

Overview
Recently I have noticed many involved in the BTC securities markets believe AMC is going to drop dramatically in price or even fail. At the moment there are few if any ways for these market participants to realize gains off their perspective on the situation. I have a positive long term outlook on AMC. I'm willing to buy call options from someone who does not have any AMC shares to sell at the moment, which I suspect is the majority of traders wishing to realize gains off AMC's potential downfall.

The seller of these call options to me will need to post collateral to ensure sufficient funds are available in the event I wish to exercise my right to buy at the end of the option timeline. An escrow will be used to hold the seller's collateral and to pay the seller my BTC once the collateral has been posted. In the event I do not exercise my right to buy at the end of the option timeline the seller will have the collateral returned by the escrow. BTC and/or ASICMINER Shares are acceptable collateral. Any dividends collected on shares will be returned to seller.

Details

• Strike Price: 0.004
• Cost Per Share: 0.0005
• Number of Shares: 20000
• Expiration Date: September 28th 2013 11:59PM GMT
• Escrow: John K or other reputable
• Minimum Collateral: 25 BTC or Highest Bidder
• Auction End: June 28 2013 9:00PM GMT

Special Conditions
In the event the cost of purchasing the AMC shares at the current market price exceeds the value of the collateral the escrow will use the collateral to purchase AMC shares so as to ensure the seller does not default on obligations. The seller may post more collateral to avoid triggering this event at any time.

Closing
The contract goes to the bidder who agrees to post the most collateral above 25 BTC. Failure to post collateral to the escrow within 4 hours of auction close will result in the contract going to the next highest bidder. Once collateral has been received the escrow will send the 10BTC. I think this is a good opportunity for someone with a negative outlook on AMC to make a nice profit in the event their perspective is accurate.

[Kyune]

Out of curiosity, is there a particular reason you don't want to use the options functionality already built into BTCT and Bitfunder, the two markets where AMC is already traded?

[Surprise]

From the CBOE margin rules:

Short Call

Initial margin requirement:
100% of option proceeds, plus 20% of underlying security value less out-of-the-money amount, if any
minimum requirement is option proceeds plus 10% of the underlying security value
proceeds received from sale of call(s) may be applied to the initial margin requirement
after position is established, ongoing maintenance margin requirement applies, and an increase (or decrease) in the margin required is possible

Basically, your escrow request is far too high.

Beyond that, I wouldn't advise anyone to take this deal as Ken has a history of manipulating his stock price.  He was caught by Ukyo and had his hand slapped for it, but that only means he will be more careful next time.

We're not trading on the CBOE here. I'm taking extra measures to ensure whoever sells this to me can meet agreed upon obligations. I think profit margins are still strong for sellers if their perspective is correct, especially if they are long ASICMINER and post those shares as collateral. I also think it would be an undue burden on the escrow to have to constantly monitor, accept/withdraw collateral.

Out of curiosity, is there a particular reason you don't want to use the options functionality already built into BTCT and Bitfunder, the two markets where AMC is already traded?

BTCT and BF require call options to be covered before being written. Put another way, someone needs to own BTCT or BF shares before they can sell call options on them. Traders with a negative outlook on AMC are unlikely to hold any AMC shares or want to hold any. They have no way to profit off an expected collapse of AMC's share prices. I'm giving them an opportunity they didn't have before and in return getting call options on terms I desire.

[John (John K.)]

As per agreement in PM:

-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1

The escrow address for Surprise's Options transaction would be:

1HQdTr4ipekzhtrFhzoa5eoF1m1UPUpZ1n

Please state and agree to the conditions (if item is received damaged, item lost with tracking, customs fee etc) beforehand.

If possible, GPG sign your agreement to prevent any discrepancies later on and please ship with tracking to prevent problems during delivery. GPG signing is not a requirement, and any verbal exchange in the form of private messages or posts on bitcointalk.org, or email is effective as a statement of condition.

The fine print:
This Contract is solely generated for the purpose of facilitating the transaction between the seller and the buyer, which refers to the pseudonyms used on bitcointalk.org.
The escrow holder, John, assumes and gives no liability or guarantees on the satisfaction of all parties involved, although he agrees to mediate and facilitate the deal to the fullest extent he is capable of.  On the event that any problems arises, he will release the escrow to whichever party that presents him with the most convincing proof and/or after an open discussion with others or theymos. 
The verbal acceptance by both parties (or the failure to reject) and the sending of Bitcoins to the escrow address above constitutes the acceptance of the terms and conditions stated, and the activation of this Contract.

Please understand that I am assuming the risk of holding the escrowed Bitcoins, and I am using my own time to facilitate this transaction.   
As per agreement, I am imposing a fixed and nonrefundable fee of 0.5BTC for this transaction, pre-paid to 1NB1KFnFqnP3WSDZQrWV3pfmph5fWRyadz before the start of the escrow.

If I am offline when the BTC is received (please check on blockchain.info), please consider the escrow active (and go ahead with shipping etc) when the transaction gets 3 confirmations or more as the escrow address is unique for this transaction.


Thank you.

John (the escrow holder)
28 June 2013
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[Rodyland]

Basically, your escrow request is far too high.

I don't follow you. 

By your own figures:
100% of option proceeds = BTC10
20% of underlying security value less out-of-the-money amount = 20k * BTC0.0025 * 20% = BTC10

Giving total "escrow" requirement of BTC20.

However, the option proceeds are included in the above.

Surprise is asking for BTC25, but you get to keep the BTC10 option proceeds, so really he's only asking BTC15. 

So please, I'm obviously missing something, please explain.

[Entropy-uc]

Basically, your escrow request is far too high.

I don't follow you. 

By your own figures:
100% of option proceeds = BTC10
20% of underlying security value less out-of-the-money amount = 20k * BTC0.0025 * 20% = BTC10

Giving total "escrow" requirement of BTC20.

However, the option proceeds are included in the above.

Surprise is asking for BTC25, but you get to keep the BTC10 option proceeds, so really he's only asking BTC15. 

So please, I'm obviously missing something, please explain.

20% of the underlying, less any out of the money value.   The option is out of the money by more than 20% so there is no underlying value to post.

[Rodyland]

Basically, your escrow request is far too high.

I don't follow you. 

By your own figures:
100% of option proceeds = BTC10
20% of underlying security value less out-of-the-money amount = 20k * BTC0.0025 * 20% = BTC10

Giving total "escrow" requirement of BTC20.

However, the option proceeds are included in the above.

Surprise is asking for BTC25, but you get to keep the BTC10 option proceeds, so really he's only asking BTC15. 

So please, I'm obviously missing something, please explain.

20% of the underlying, less any out of the money value.   The option is out of the money by more than 20% so there is no underlying value to post.

Your understanding of what"20% of the underlying less the out of the money" obviously differs greatly from mine. To me it means that for options out of the money it's 20% of market. I cannot believe that you honestly believe that for options out of the market it means ":free".


So please share what you think the escrow would be for options under This pricing model would be with your understanding.

[ThickAsThieves]

... I wouldn't advise anyone to take this deal as Ken has a history of manipulating his stock price.  He was caught by Ukyo and had his hand slapped for it, but that only means he will be more careful next time.

+1

[Surprise]

I think there has been a misunderstanding if people are afraid of selling this because they believe Ken may temporarily manipulate the asset price and put me in the money. As long as enough collateral is posted they won't be forced to buy shares of AMC to ensure they meet their obligation to me. The only time I can execute this option is at the expiration date. I can not execute it at any time before that. This is why it is a European call option instead of the more commonly used American call option used on BTCT and BF. The European style was chosen to reassure sellers that they would not be negatively impacted by a temporary spike in price provided they simply had enough collateral of which they can send more to the escrow at any time.

edits: bolded for emphasis

[newguy05]

1) what exchange are you basing the strike price on?
2) what determines the settlement price, for such thinly traded market, you cant base on the closing price on a specific time at  expiration date. It needs to be the average price for the last 24-48 hours taken at hourly interval to avoid price manipulation
3) i cant comment on the premium you are charging because i have no idea what the current price is compared to the strike you are posting, if the strike is atm or otm.

All in all, this is interesting.

[Surprise]

1) what exchange are you basing the strike price on?
2) what determines the settlement price, for such thinly traded market, you cant base on the closing price on a specific time at  expiration date. It needs to be the average price for the last 24-48 hours taken at hourly interval to avoid price manipulation
3) i cant comment on the premium you are charging because i have no idea what the current price is compared to the strike you are posting, if the strike is atm or otm.

All in all, this is interesting.

1. Bitfunder will be the exchange used to value AMC as that is the main exchange on which AMC is traded. BTCT just has passthrough shares, and at the moment BF has way more shares issued and trading than BTCT. This is negotiable, if the seller really wants to value on BTCT we can work something out.

2. Any parts of this contract that relate to AMC's value are referring to AMC's currently traded value at BF. This is negotiable, we can make it the 24 hour average at BF or some other thing if the seller wants that.

3. The price as of this posting on BF is 0.002149. AMC's price has to more than double before I'm in the money.

[Ozymandias]

So if I'm understanding this right, ignoring the time-cost of the funds tied up in escrow, are the below scenarios correct?

I have no shares
I sell 20,000 call options with strike 0.004ea for a premium of 0.0005ea for a total of 10btc
Total spent = -10btc for 0 shares with an obligation to obtain 20,000shares if the call is in the money (min 80btc)
If in September AMC<0.004; profit = 10btc
If in September AMC>0.004; profit < -70btc

OR

I buy 10,000 shares at 0.002ea (roughly the going rate at the moment) for a total of 20btc
I sell 20,000 call options with strike 0.004ea for a premium of 0.0005ea for a total of 10btc
Total spent = 10btc for 10,000 shares or 0.001ea with an obligation to obtain 10,000shares if the call is in the money (min 40btc)
If in September AMC<0.001; -10btc<profit<0
If in September 0.001<AMC<0.004; 0<profit<10btc
If in September AMC>0.004; profit<-30btc

OR

I buy 20,000 shares at 0.0020ea (roughly the going rate at the moment) for a total of 40btc
I sell 20,000 call options with strike 0.004ea for a premium of 0.0005ea for a total of 10btc
Total spent = 30btc for 20,000shares or 0.0015ea
If in September AMC<0.0015; -30btc < profit < 0
If in September 0.0015<AMC<0.004; 0<profit<80btc
If in September AMC>0.004; profit>80btc

OR

I buy 40,000 shares at 0.0020ea (roughly the going rate at the moment) for a total of 80btc
I sell 20,000 call options with strike 0.004ea for a premium of 0.0005ea for a total of 10btc
Total spent = 70btc for 40,000shares or 0.00175ea
If in September AMC<0.00175; -70btc<profit<0
If in September 0.00175<AMC<0.004; 0<profit<160btc
If in September AMC>0.004; profit>160btc

I'm specifically interested in variant #3, in which case, would it be possible to just put 20,000 shares in escrow instead of btc?

EDIT: Since the end of the auction is quick approaching, I just wrote a 20,000share call option on btct (my preferred exchange) to expire on September 20 (the only available date in september, but for our purposes it shouldn't matter much) with a strike price of 0.004 and a premium of 0.000504 (I tried to make it so that with the exchange fee the premium would be as close to 0.0005 as possible).

Hopefully, you're right and AMC does do well so we both profit!

[Kushedout]

I think he is reconsidering his offer now, AMC just dropped to below .000805 now.

[Ozymandias]

Well shit, that'd tie up my 20k shares for 84 days, but I suppose that's the price of being rash. I was always more of a gambler than an investor anyway.

EDIT: well, looks like someone bought 100, just 19,900 to go!

[Kyune]

Well shit, that'd tie up my 20k shares for 84 days, but I suppose that's the price of being rash. I was always more of a gambler than an investor anyway.

Are you able to delist the option on BTCT, and free up the collateral, if it is not purchased?

[Ozymandias]

Well shit, that'd tie up my 20k shares for 84 days, but I suppose that's the price of being rash. I was always more of a gambler than an investor anyway.

Are you able to delist the option on BTCT, and free up the collateral, if it is not purchased?

I'm not certain though even if I could, I suppose I would just leave it up there as a sort of a challenge to fellow gamblers; what makes btct the optimal venue for the buyer (as optimal as buying calls at 3-5x share price can be) is that the options are American so they can be exercised at any point up until they expire

EDIT: actually, that's something I should know. I'm going to attempt to delist/revoke the 19900 shares and put up a new 20,000 option. If I'm allowed to do so, then you'll soon see a new option up, if not, then the 19900 will stay

EDIT2: Well this is strange. I recalled the 19900 (since the 100 were already bought I obviously couldn't recall them) and the listing disappeared from btct but my account is still showing up as having 20000 shares reserved. I want to put up the 20,000shares, but I don't want any additional shares to be reserved (as in I don't want any more than 20,100 shares to be reserved total). I suppose more testing will be necessary to figure out how this options engine works.

EDIT3: Looks like writing another option (for 1 share as a test) reset the number of "reserved" shares. 20,000 call option back up on btct as of 10 seconds ago.

[Kyune]

Well shit, that'd tie up my 20k shares for 84 days, but I suppose that's the price of being rash. I was always more of a gambler than an investor anyway.

Are you able to delist the option on BTCT, and free up the collateral, if it is not purchased?

I'm not certain though even if I could, I suppose I would just leave it up there as a sort of a challenge to fellow gamblers; what makes btct the optimal venue for the buyer (as optimal as buying calls at 3-5x share price can be) is that the options are American so they can be exercised at any point up until they expire

EDIT: actually, that's something I should know. I'm going to attempt to delist/revoke the 19900 shares and put up a new 20,000 option. If I'm allowed to do so, then you'll soon see a new option up, if not, then the 19900 will stay

EDIT2: Well this is strange. I recalled the 19900 (since the 100 were already bought I obviously couldn't recall them) and the listing disappeared from btct but my account is still showing up as having 20000 shares reserved. I want to put up the 20,000shares, but I don't want any additional shares to be reserved (as in I don't want any more than 20,100 shares to be reserved total). I suppose more testing will be necessary to figure out how this options engine works.

EDIT3: Looks like writing another option (for 1 share as a test) reset the number of "reserved" shares. 20,000 call option back up on btct as of 10 seconds ago.

Thanks for the testing and report.  I've been a little gun-shy of using the options features on the various exchanges because of ambiguities like these.

[Surprise]

No one bought these options before the auction time closed so consider the offer closed. I am willing to provide a similar offer with different terms if someone wants to propose them to me. I'm also really surprised that not one of the many that are publicly predicting AMC's imminent demise would sell call options to me.

[TheSwede75]

No one bought these options before the auction time closed so consider the offer closed. I am willing to provide a similar offer with different terms if someone wants to propose them to me. I'm also really surprised that not one of the many that are publicly predicting AMC's imminent demise would sell call options to me.

Good job running an "options offer" for a whole day kid. Why don't you just go hide under the same rock that AMC seems to have pre-warmed for you with their scammy 0.0025 'second IPO" at 5 x initial share offer a few weeks after initial listing.

Almost wish I had take you up on your rigged idiot offer just to see you crash and burn.

[ArcticWolf]

No one bought these options before the auction time closed so consider the offer closed. I am willing to provide a similar offer with different terms if someone wants to propose them to me. I'm also really surprised that not one of the many that are publicly predicting AMC's imminent demise would sell call options to me.

Good job running an "options offer" for a whole day kid. Why don't you just go hide under the same rock that AMC seems to have pre-warmed for you with their scammy 0.0025 'second IPO" at 5 x initial share offer a few weeks after initial listing.

Almost wish I had take you up on your rigged idiot offer just to see you crash and burn.

Really pushing the AMC hate-train aren't we?