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Author Topic: Reverse auction: Buying lookback call option on BTC with floating strike, 1mth  (Read 2281 times)
brendio
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January 04, 2012, 01:54:37 PM
 #21

Oh, you actually ran the model!  So what did LCt come out to be?

No, I pulled a number out of my backside based on the assumption that the bitcoin price could easily halve or double over the next month, so the required premium would need to cover me for that eventuality. I come to the conclusion that these options are scary things to write.

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ineededausername
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January 04, 2012, 02:36:38 PM
 #22

I come to the conclusion that these options are scary things to write.

They sure are Grin

(BFL)^2 < 0
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January 04, 2012, 02:50:55 PM
 #23

I would be more willing to write an option deal like this with a fixed number of BTC instead of a fixed USD amount. So an option to buy 200 btc at $5 would be something I would be more willing to underwrite as your risk profile is easy to comprehend.

Maybe I'm just a tad stupid, but giving someone the option $1000 of btc at the lowest price over the next thirty days is quite a volatile prospect. If the price goes back to $2.50, that means you need to have 400 btc on hand to cover the $1k buy and be willing to sell those 400 btc at that price + the premium.

Also, the growth pattern of the purchasing power of the $1000 does not sit right in my stomach. You have the opportunity to make at most your premium, but your risk exposure is much greater than that. One would need to be playing both sides of the fence in order to make this work.
El Cabron
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January 05, 2012, 02:20:46 AM
 #24

I would be more willing to write an option deal like this with a fixed number of BTC instead of a fixed USD amount. So an option to buy 200 btc at $5 would be something I would be more willing to underwrite as your risk profile is easy to comprehend.

Maybe I'm just a tad stupid, but giving someone the option $1000 of btc at the lowest price over the next thirty days is quite a volatile prospect. If the price goes back to $2.50, that means you need to have 400 btc on hand to cover the $1k buy and be willing to sell those 400 btc at that price + the premium.

Also, the growth pattern of the purchasing power of the $1000 does not sit right in my stomach. You have the opportunity to make at most your premium, but your risk exposure is much greater than that. One would need to be playing both sides of the fence in order to make this work.


Yes, and one would need deep pockets to cover the loss. I think I would be willing to take the risk near Brendio's bid but not much lower:)

The way I would do it is buy $1000 BTC now and then keep $2000 on hand to buy BTC at lower and lower prices. If BTC goes too low then I would have to get more funds. But the payoff would be decent assuming this did not happen.

Sorry El Cabron, you are banned from posting or sending personal messages on this forum.
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https://bitcointalk.org/index.php?topic=622250.msg7030081#msg7030081
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January 05, 2012, 02:45:48 AM
 #25

OK, concluded that your offers are too pricey (read: not enough dumb people on this forum offering me 5% Smiley )
Sorry everyone.  I think $1100 is reasonable but I don't feel like risking it.

(BFL)^2 < 0
brendio
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January 05, 2012, 03:12:06 AM
 #26

OK, concluded that your offers are too pricey (read: not enough dumb people on this forum offering me 5% Smiley )
Sorry everyone.  I think $1100 is reasonable but I don't feel like risking it.

I didn't think you'd make a deal, but you do bring up some interesting thought experiments.

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January 05, 2012, 04:50:32 AM
 #27

OK, concluded that your offers are too pricey (read: not enough dumb people on this forum offering me 5% Smiley )
Sorry everyone.  I think $1100 is reasonable but I don't feel like risking it.

I didn't think you'd make a deal, but you do bring up some interesting thought experiments.

We do need an options market... we've needed one for a long time.

(BFL)^2 < 0
brendio
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January 05, 2012, 05:46:48 AM
 #28

OK, concluded that your offers are too pricey (read: not enough dumb people on this forum offering me 5% Smiley )
Sorry everyone.  I think $1100 is reasonable but I don't feel like risking it.

I didn't think you'd make a deal, but you do bring up some interesting thought experiments.

We do need an options market... we've needed one for a long time.

Agree. I think bitoption.org still has some of my coin. Did alright out of it while it lasted.

El Cabron
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January 05, 2012, 10:35:35 AM
 #29

I have also been wanting an options market. Sadly I am not skilled enough to be able to set one up.

Sorry El Cabron, you are banned from posting or sending personal messages on this forum.
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https://bitcointalk.org/index.php?topic=622250.msg7030081#msg7030081
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