Boomerlu you are continuing the icbit tactic of "If you can't dazzle them with brilliance, baffle them with bullshit".
You know very well that the contracts on icbit are almost completely disconnected from the bitcoin market. icbit prices are most often the result of a position reacting to a trader who is not aware of what goes on, squeezing the trader and extracting the contracts cheaply. That was done to me several times, with contracts being put down against the movement of spot and apparently with knowledge of my account particulars that only icbit staff would have.
The nonsense about backwardation etc is getting old. You know it very well but I'll spell it out for anyone who might be deceived by you. The price of a contract at icbit moves for a short time with contracts bought by someone landing on the site. Once that person has some bitcoin vested all of the major price moves are artificial pushes deliberately meant to squeeze the client, force margin. There is nothing to do with backwardation, contango or anything else. Those words are used to con people plain and simple.
As far as "nowhere does volatility enter as a factor", that's silly. I've covered this in another post, you cannot have leverage that ignores volatility in valuation. It is the first signature of a scam.
You can use all the big words you want, maybe you will impress someone. I know bullshit when I hear it.
The only reason the contracts are disconnected from the market is a lack of liquidity/market makers. And no they are not completely disconnected, the spread has come in a LOT since I first started trading there.
You can theorize WHY the contract traded away from spot, and indeed there can be many reasons. But, the primary reason for it to trade IN LINE with spot is arbitrage. Buy in one place sell in another, driving the price up in the first place, down in the other. There has to be significant capital/automated strategies in place for that to happen, and that just isn't the case with ICBIT.
I told you when leverage makes volatility a factor and when it doesn't - it all has to do with the option of the contract holder to default (as you pointed out), but both Long and Short can default, so such an effect should only increase the bid/ask spread, not spot-futures spread. Honestly, go pick up a copy of Hull (Options Futures and Other Derivatives), because you clearly have no idea what you're talking about.
I acknowledge ICBIT is being manipulated, but from where I'm sitting, it's most likely not the owners, just traders. It's just a market with orders, people are going to trade around. And besides, recently it's been pretty close to spot - not more than say 10 points off (with a wide spread).
Finally, I am not trying to impress anybody, I am just correcting some really bad misinformation. I have no affiliation with ICBIT except that I trade there and they actually got their contract design correct. I've also given them advice on how to correct some of the more glaringly bad things they do. I would like for there to be more liquidity in their market.
