I posted this
in another thread, but decided that it was buried so deep in the thread it probably wouldn't be noted by interested individuals. As such, I am re-posting it to its own thread.
Here's an idea I'm thinking about, any thoughts?
I would announce the offer of multiple 10 mBTC vanilla European call options all with the same specified strike price ($600, for example), and the same specified expiration date (2014-05-16, for example).
Lets say for example that I offer 1000 such options. (so options to purchase a total of 10 BTC in 0.01 BTC increments).
To determine who gets the options, and what price they pay for the options, I'd hold an auction.
Potential option buyers would indicate how many 10 mBTC options they want to buy, and what they are willing to pay per option. So, a bid of "10 options @ 0.0003 BTC each" would indicate paying a total of 0.003 BTC purchase fee for a total of 0.1 BTC worth of options.
After the expiration of the auction, the highest bidder (price per option) would receive the options they wanted at the price they bid. If any options remain, the second highest bidder would receive the options they wanted at the price they bid. This distribution of options would continue until there weren't enough options left to completely fill a bid. If there aren't enough options remaining for the lowest winning bidder, they would have the right to choose if they want to participate at their bid price for all the remaining options or if they don't want to participate at all (since their full bid wasn't filled completely). If they choose not to participate, the process would continue with the next lowest bidder, until all options were purchased, or all bids were filled.
If multiple bidders bid the same price per option, then the bids would be filled in the order they are received.
The auction would end at some pre-announced deadline (48 hours after the auction announced, for example)
All bidders would have a specified amount of time (perhaps 24 hours?) from the close of the auction to send confirmed bitcoin transactions to the announced option address. If a purchase transaction does not receive 3 confirmations prior to the payment deadline, then their payment would be considered invalid and returned to them. The options they bid on would remain unpurchased.
To simplify payout on the option expiration date, all bid would not be considered valid unless it includes a bitcoin address that the payout (if any) should be sent to.
I'm looking for some feedback before I decide if I actually want to put in the time and effort to run (and fund) this.
Some questions that I'm trying to make decisions about:
Is 10 mBTC per option a good choice? Should it be 1 mBTC? 100 mBTC? 1 BTC?
How many "units" would there be interest for? (this would probably depend a bit on the size of each unit)
What would be a good strike price to attract bidders, while still reducing risk if an insufficient number of bidders participate.
What is a good amount of time to run the auction phase of the offer? 3 hours? 24 hours? 48 hours? 7 days?
What is a good expiration date for the options? May 16? May 23?
Is this a good way to run this auction for multiple identical units, or is there some other form of auction that would work better?
Any other thoughts, questions, suggestions, or concerns?
