MASSIVE options order on apex.co

[Nathanael_]

WOW

https://i.imgur.com/OebKdAJ.png
http://dpaste.com/1585744/

http://mpex.co

EDIT: I don't know the legitimacy of this, I'm just sharing and want to know more.

[Nathanael_]

I believe they are. It looks like someone is betting 5000 BTC (4 million USD) that the price will be going DOWN…..please correct me if I'm wrong, because I think this is a big deal.

Here is some ppl taking about it on IRC: http://log.bitcoin-assets.com/?date=04-02-2014#479318

[billyjoeallen]

You do realize that a whale planning to buy thousands of BTC would put in exactly this type of put option to hedge his position, right?

[MatTheCat]

I believe they are. It looks like someone is betting 5000 BTC (4 million USD) that the price will be going DOWN…..please correct me if I'm wrong, because I think this is a big deal.

Here is some ppl taking about it on IRC: http://log.bitcoin-assets.com/?date=04-02-2014#479318

I have no idea what apex is and I guess that big list of figures can just be a big pile of turd....

....but if the figures are legit and relate to actual put options, then I guess there is a whole pile of Bitcoin related money hedging their positions and/or speculating on Bitcoin going down.

You do realize that a whale planning to buy thousands of BTC would put in exactly this type of put option to hedge his position, right?

Go back over your post history and show me one time that you have actually been right since Bitcoin went into reverse and the '2 da moon' calls stopped cutting it. Although I can't honestly say that I can decipher what the fuck these 'orders' actually entail from the information I have, the fact that you reckon it's all whales hedging themselves before they go on a massive Bitcoin buying spree, makes me think it is far more likely to be those in the know, hedging against a massive fall in the price of Bitcoin.

[BitcoinAshley]

Don't worry, it's just Walsoraj.

[MatTheCat]

I just had a look on the website and yes they are puts expiring at the end of the month at prices between $410 to $500. Don't know if they use gox or stamp prices there.

are you able to tell us what these orders actually mean. Are these option contracts to sell Bitcoin at a future date at these much lower prices?

[Walsoraj]

Don't worry, it's just Walsoraj.

 

[MatTheCat]

They just have disappeared from the website. It would have meant that somebody was betting that the price would be between $410 and $500 before the end of the month.

I have never engaged in a Put option.

From what I understand. A holder of an asset can protect themselves by buying a contract allowing them the option of selling an asset at a stated price, at a certain date in the future. In this case, the holders of the Put option would have the right to sell a big fkn pile of BTC to the counterparty at between $410 - $500, which would have to mean that they thought there was a risk of Bitcoin going much lower and were trying to lock in wealth.

The other way around, would be someone buying the put option giving them the option of buying Bitcoins at $410 - $500 at a certain date in the future. But given the current market conditions, I can't see anyone agreeing to be the counterparty to such a contract. To agree to be a counter-party to such a contract, you would have to be utterly convinced that Bitcoin was going much lower and that there was no chance of the option ever being claimed.

Therefore, if these numbers and letters relate to any real financial deals, it must surely be owners of large amount of Bitcoins hedging themselves against total collapse of the market. Nothing else makes sense. Especially not the kneejerk denialist response of that fkn div, billyjoeallen. (the man who wants to start his own Bitcoin 'consultancy' .. shudderrrrrr...     )

[BitcoinAshley]

They just have disappeared from the website. It would have meant that somebody was betting that the price would be between $410 and $500 before the end of the month.

Edit:they reappeared.

Translation: Walsoraj saw this thread and is now preceding to fuck with you. 

[mladen00]

Hi,


if someone thinks that one month from now the price will be 400$ why that person dont sell now?

 somebodys brain isnt working

[Nathanael_]

Hi,


if someone thinks that one month from now the price will be 400$ why that person dont sell now?

 somebodys brain isnt working

Thats pretty much what they did. If you want to know more about options: http://www.investopedia.com/terms/p/putoption.asp

[Bitsinmyhead]

I would be very surprised if anyone made a $4M bet using that site. Use your brains people, if someone bought puts at 400-500 for 4 million how much would whoever issued those need to put up, probably somewhere around $100M 

Trying to figure out that site makes my brain hurt, but this might be a hint:
"One lot consists of 0.1 BTC. All options expire on the last minute of the last Friday of their month (UTC times)."

Also there is no way anyone pays 487 bitcoins to be able to sell 1000 bitcoins for $500 in one month. If you do not see why, you might be interested in the bet I proposed here: https://bitcointalk.org/index.php?topic=445142.0

[HairyMaclairy]

I just read their FAQ which basically says to their customer base "idiots fuck off and die".  

With that level of professionalism from the site admin I doubt anyone in their right mind is putting significant sums on the site.  

Also their joining fee is still stated as 30 BTC !

Amusing but wouldn't take them seriously.

[wobber]

I just read their FAQ which basically says to their customer base "idiots fuck off and die".  

With that level of professionalism from the site admin I doubt anyone in their right mind is putting significant sums on the site.  

Also their joining fee is still stated as 30 BTC !

Amusing but wouldn't take them seriously.

High prices makes idiots think they're part of some elite. I don't take em seriously either.

[Bugpowder]

Are those puts on the price?

That is someone selling puts to the MPEX bot.  They are going short 25,000 PUT contracts that are deep in the money. Note, that the contract is for the price of 0.1BTC.  So they are shorting puts with at strike price from $4100 - $5000 / BTC

About an $8,000,000 notional value on those contracts now.  Looks like a pretty smart play actually.  Current BTC price is $847.  It is extremely expensive to purchase calls or puts on MPEx due to the huge volatility premium.  But you can sell to the market maker for more reasonable mark up if you have additional backing capital deposited to cover the short risk.

Let's run the numbers :
If expiry happened today, simplifying calculations as if all contracts were P500Ts...
 (5000-847)/847*.1BTC = .490 price, or break even. 

But expiry in end of month, so by then,
If BTC drops to $700, (5000-700)/700*.1BTC = .614, or about a 25,000*(.49-.614) = 3100BTC loss
If BTC rises to $1000, (5000-1000)/1000*.1 = .4, or 25,000*(.49-.4) = 2250BTC gain

Love or hate MPEX, it is the only place in the world that has proven it can handle this sort of exposure. In fact, this is a pretty small position in BTC terms compared to what people were throwing around in march 2013.  I believe they paid out 19,407 BTC that month to people that bought calls, of which 15,000BTC was personally covered by Mr. Popescu, which appears to have wiped out all of the profits he made from the first 2 years of operations of MPEx.

[Bugpowder]

I would be very surprised if anyone made a $4M bet using that site. Use your brains people, if someone bought puts at 400-500 for 4 million how much would whoever issued those need to put up, probably somewhere around $100M  

Trying to figure out that site makes my brain hurt, but this might be a hint:
"One lot consists of 0.1 BTC. All options expire on the last minute of the last Friday of their month (UTC times)."

Also there is no way anyone pays 487 bitcoins to be able to sell 1000 bitcoins for $500 in one month. If you do not see why, you might be interested in the bet I proposed here: https://bitcointalk.org/index.php?topic=445142.0

It's actually an over $8M bet on the price to rise.  Its a set of naked short puts DITM, where downside exposure is technically unlimited. The position holder would probably need to cover for a 25,000 BTC loss if the bitcoin price dropped below $500 /BTC during the month.  However, they will make a sizable profit if the price goes up.

[Chalkbot]

Thanks for translating Bugpowder. I think this is the second time you've jumped in and explained one of these things to me.

[MatTheCat]

Thanks for translating Bugpowder. I think this is the second time you've jumped in and explained one of these things to me.

Yup....this is why the forum needs a thumbs up system. People need a means of showing approval and appreciation without spamming up the thread with posts like this one.

[gog1]

Are those puts on the price?

That is someone selling puts to the MPEX bot.  They are going short 25,000 PUT contracts that are deep in the money. Note, that the contract is for the price of 0.1BTC.  So they are shorting puts with at strike price from $4100 - $5000 / BTC

About an $8,000,000 notional value on those contracts now.  Looks like a pretty smart play actually.  Current BTC price is $847.  It is extremely expensive to purchase calls or puts on MPEx due to the huge volatility premium.  But you can sell to the market maker for more reasonable mark up if you have additional backing capital deposited to cover the short risk.

Let's run the numbers :
If expiry happened today, simplifying calculations as if all contracts were P500Ts...
 (5000-847)/847*.1BTC = .490 price, or break even. 

But expiry in end of month, so by then,
If BTC drops to $700, (5000-700)/700*.1BTC = .614, or about a 25,000*(.49-.614) = 3100BTC loss
If BTC rises to $1000, (5000-1000)/1000*.1 = .4, or 25,000*(.49-.4) = 2250BTC gain

Love or hate MPEX, it is the only place in the world that has proven it can handle this sort of exposure. In fact, this is a pretty small position in BTC terms compared to what people were throwing around in march 2013.  I believe they paid out 19,407 BTC that month to people that bought calls, of which 15,000BTC was personally covered by Mr. Popescu, which appears to have wiped out all of the profits he made from the first 2 years of operations of MPEx.

He's deep under the water right now.

[Bugpowder]

Are those puts on the price?

That is someone selling puts to the MPEX bot.  They are going short 25,000 PUT contracts that are deep in the money. Note, that the contract is for the price of 0.1BTC.  So they are shorting puts with at strike price from $4100 - $5000 / BTC

About an $8,000,000 notional value on those contracts now.  Looks like a pretty smart play actually.  Current BTC price is $847.  It is extremely expensive to purchase calls or puts on MPEx due to the huge volatility premium.  But you can sell to the market maker for more reasonable mark up if you have additional backing capital deposited to cover the short risk.

Let's run the numbers :
If expiry happened today, simplifying calculations as if all contracts were P500Ts...
 (5000-847)/847*.1BTC = .490 price, or break even. 

But expiry in end of month, so by then,
If BTC drops to $700, (5000-700)/700*.1BTC = .614, or about a 25,000*(.49-.614) = 3100BTC loss
If BTC rises to $1000, (5000-1000)/1000*.1 = .4, or 25,000*(.49-.4) = 2250BTC gain

Love or hate MPEX, it is the only place in the world that has proven it can handle this sort of exposure. In fact, this is a pretty small position in BTC terms compared to what people were throwing around in march 2013.  I believe they paid out 19,407 BTC that month to people that bought calls, of which 15,000BTC was personally covered by Mr. Popescu, which appears to have wiped out all of the profits he made from the first 2 years of operations of MPEx.

He's deep under the water right now.

Yah... Valuation is based on the 24VWAP of all USD exchanges (from bitcoincharts).  The mtgox collapse hurts particularly bad then, as it figures into the level.

Current price $777.... he is down about 0.05BTC / contract, so 1250BTC or $1M.  The sick part is that to cover, he needs to buy back from the bot, and the spread the bot provides is a full 0.5BTC.  So he would need to spend 25,000BTC to close the position (for a 12,500BTC loss).  I suppose he will probably just sit tight...