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Author Topic: Selling options before Expiry on Deribit  (Read 47 times)
brophymj
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November 20, 2020, 11:11:09 AM
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Hi, I bought a few hundred ETH call options recently on Deribit with an expiry on 25 December 20. I've noticed that very in-the-money positions appear to be not very liquid and there doesn't even seem to be a market for some of them. Suppose I want to close out of my position before expiry, is there an easy way of doing it or is the only option the exchange. For example, suppose I bought 100 call options with a strike of 400 when the price was 350. If the expiry is 25 December, they're currently worth about $5k based on a price today of 500. Is it possible to sell this or do I have to wait for expiry? What are the options and do I have to accept a much lower price. Thanks in advance.
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gmaxwell
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November 20, 2020, 01:21:24 PM
Last edit: November 20, 2020, 01:46:16 PM by gmaxwell
 #2

Hi, I bought a few hundred ETH call options recently on Deribit with an expiry on 25 December 20. I've noticed that very in-the-money positions appear to be not very liquid and there doesn't even seem to be a market for some of them. Suppose I want to close out of my position before expiry, is there an easy way of doing it or is the only option the exchange. For example, suppose I bought 100 call options with a strike of 400 when the price was 350. If the expiry is 25 December, they're currently worth about $5k based on a price today of 500. Is it possible to sell this or do I have to wait for expiry? What are the options and do I have to accept a much lower price. Thanks in advance.

I don't use Deribit (or trade premined coins like Ethereum...) but I do use LedgerX and ITM options can be a bit illiquid there too.

One thing you should do is put in an order on the books--  just because volume isn't on the books doesn't mean that it isn't around and won't take a good deal if you put one out there.  If you're super eager to be out of the position, you'll probably have to take a bit of a haircut:  no one wants to take much risk for only a really tiny profit. (keep in mind, because deribit is cash settled the buyer also takes on risk related to the integrity of the index price)

Does deribit have a chat?  If so, you can nag to see if anyone will take your trade.

Is your intention to roll the proceeds into a different contract?   If so someone who otherwise might not be too eager to by those ITM contracts might be interested in selling a later date or higher strike that you want to buy and might be willing to buy the ITM contracts if it means they can sell a different contract.

Alternatively,  is there some other more liquid position you could trade which would substantially hedge your position achieve your goal?

Finally, if you're talking about a considerable amount of money-- you could try contacting their support.  They might be willing to contact other customers to help you arrange a deal.  (Or, if they have their own trading desk, they may be willing to take the position off your hands).
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November 20, 2020, 03:16:08 PM
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Hi gmaxwell, many thanks for your response, very helpful indeed. Would you mind explaining how the buyer takes a risk due to index price integrity. Does this mean the price which your profits are determined can be different to the price at the time.
 
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