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Author Topic: options for leverage  (Read 3401 times)
bitdragon
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June 12, 2012, 11:45:56 PM
 #21

I bought some Absorb assets on GLBSE:
https://bitcointalk.org/index.php?topic=82530.0

And on June 14th, new POLY assets slightly more elaborate should start trading:
https://bitcointalk.org/index.php?topic=86069

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June 13, 2012, 12:02:06 AM
 #22

Actually, I disagree - this could be the perfect vehicle for miners and other bitcoin holders. Covered calls in the money at inception are a great way for the bitcoin owner to make a fixed short term income based on their long term position.

For example.

I want to "lend" 1000 coins.

Current price is 5.75.

I issue a 1000 call at a strike price of 5.50  for 0.635 per coin or a $635 contract price for 28 days from now.

If bitcoin goes up past 6.135, I lose my coins, but I get $5500 plus the contract price of $635. Basically I locked in a sell price of $6.15  (7% monthly return)

If bitcoin is between 5.50 and 6.135, and the contract is exercised, I still get the $6,135. I effective sold at $6.15. (7% monthly return)

If bitcoin goes below 5.50, contract is not exercised. I keep my 1000 coins plus I now have an extra $635 I can pocket or buy more coins with.

We don't need one market maker, we need a group of miners to use covered calls.

BTW - why would someone want to buy a call already in the money? 1. They would like to speculate the coins are going up past the 6.15 with out buying a single coin. 2. They are selling coins lent to them to convert to fiat for a purchase, and want to ensure they can pay their loan in bitcoin later.

This has been your friendly neighborhood covered call lesson.
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June 13, 2012, 01:40:37 AM
 #23

Actually, I disagree - this could be the perfect vehicle for miners and other bitcoin holders. Covered calls in the money at inception are a great way for the bitcoin owner to make a fixed short term income based on their long term position.

For example.

I want to "lend" 1000 coins.

Current price is 5.75.

I issue a 1000 call at a strike price of 5.50  for 0.635 per coin or a $635 contract price for 28 days from now.

If bitcoin goes up past 6.135, I lose my coins, but I get $5500 plus the contract price of $635. Basically I locked in a sell price of $6.15  (7% monthly return)

If bitcoin is between 5.50 and 6.135, and the contract is exercised, I still get the $6,135. I effective sold at $6.15. (7% monthly return)

If bitcoin goes below 5.50, contract is not exercised. I keep my 1000 coins plus I now have an extra $635 I can pocket or buy more coins with.

We don't need one market maker, we need a group of miners to use covered calls.

BTW - why would someone want to buy a call already in the money? 1. They would like to speculate the coins are going up past the 6.15 with out buying a single coin. 2. They are selling coins lent to them to convert to fiat for a purchase, and want to ensure they can pay their loan in bitcoin later.

This has been your friendly neighborhood covered call lesson.

@waltmarkers: I completely agree. Thanks for that textbook example of the advantage of writing covered calls as applied to Bitcoin.

I would add a 3rd reason for someone wanting to buy a call already in the money: As I noted above options can provide leverage. If a person believes the price is heading to $7.00 for example and has $635 they can either buy the option you mentioned or buy bitcoins directly. If they buy bitcoins directly at the current price of $5.75 they can afford 110 bitcoins. Multiplying that by the difference gives 110 x $1.25 = $138.00 is the maximum they could profit from that price move.

However, buying your option at $635 yields 1000 x 1.50 = $1500, then subtracting the $635 = $865 of profit they could make. Quite a difference. More risky, of course, but no comparison in terms of profit potential.

Perhaps I should be explaining this to the miners...  Wink

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July 07, 2012, 02:33:54 PM
 #24

With bitcoinica down, what options do speculators have for leveraging?

We have launched futures trading at https://icbit.se yesterday. "Leverage" is about 1:4, you're welcome to try it out. In case of any suggestions or issues - please use this thread: https://bitcointalk.org/index.php?topic=50817.0

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
Follow us in Twitter: https://twitter.com/orderbooknet
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July 08, 2012, 06:14:30 PM
 #25

dammit, whats with margin trading?
KRONOS!!
BITDAYTRADE!!!!
WHERE ARE YOU??

Does anybody use https://bitcoinopx.com Huh
Any volume there as of now?
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July 08, 2012, 07:05:51 PM
 #26

dammit, whats with margin trading?
That's what I mean - those who want to trade with margin are welcome to trade futures. We provide some liquidity ourselves too, so there is volume from the start. Plus, the market is transparent and open to everyone, so it's better than a bucket shop where you have to play by their rules.

Bytheway, I just started a twitter feed to give out various small updates happening to the website. https://twitter.com/icbit_se for those who's interested.

Margin trading platform OrderBook.net (ICBIT): https://orderbook.net
Follow us in Twitter: https://twitter.com/orderbooknet
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July 23, 2012, 06:49:00 PM
 #27

With bitcoinica down, what options do speculators have for leveraging?

I can't actually think of any, which means it's back to the pre-bitcoinica days, with just a pure trading market. If I'm mistaken and there are indeed other leverage options around, I would be interested to know the other services offering longs/shorts.

Sure, Bitcoinica will be back online again in the near future. But in the meantime, without the 'stabilising effects' of bitcoinica that was often touted, what's the most likely thing to happen with the market?

I've used LTC for leverage. Made about 900% since march since I bought LTC. Converted to BTC then to USD after BTC peaked.

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July 24, 2012, 12:32:47 AM
 #28

How much did you invest 10 bucks?
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July 24, 2012, 12:37:15 AM
 #29

How much did you invest 10 bucks?

$1350. Bought btc at $4.80 and $5.20

Wanna be a troll now? Grin Grin Grin

Edit: Sold 227k LTC for 1256 BTC....then price rose to $9.20

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July 24, 2012, 12:56:21 AM
 #30

Then how do you get your 900%?? It doesnt add up yet.
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July 24, 2012, 01:24:38 AM
 #31

Then how do you get your 900%?? It doesnt add up yet.

Show me your math so I can show you where your error is...the math adds up for me bro.  Grin Grin Grin Grin

Edit: I'll have you know that I bought LTC at 0.001btc/LTC. And I bought about 227k of them.

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July 24, 2012, 11:42:02 AM
 #32

Quote
I bought LTC at 0.001btc/LTC

Aha, now we got all the pieces for the equation. Congratulations, your math is right!
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July 25, 2012, 02:06:06 AM
 #33

Quote
I bought LTC at 0.001btc/LTC

Aha, now we got all the pieces for the equation. Congratulations, your math is right!

My math was never wrong. You just never asked the right questions for the right data. Boo hoo for u lol

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July 25, 2012, 02:08:39 AM
 #34

did you guys see this new site?

https://bitcoinopx.com/how-it-works

Quote
Option type and size
There are call and put options which may represent either 1, 10, 100, or 1,000 of the underlying asset.

Contract for Difference
Options here are exercised as contracts for difference. This is advantageous as traders don't have to own the underlying asset. Instead, when an option expires if it is in-the-money the option creator pays the holder the difference between market price and strike price per bitcoin. Here is an example.

Bob creates a CALL 100 option with strike price $5.25 maturing a week later. The current price is $5.20 and Bob thinks it is headed lower. He puts the option on sale for $10.00.

Suzy buys the option because she thinks the price is headed higher. On the Friday of maturity at 6 p.m. the market price is $5.50, which is a difference $.25 higher than the strike price. Bob would pay the difference $.25 multiplied by 100 (the size of the option) which equals $25.00.

their options are kinda confusing... but it would seem to offer some kind of leverage.

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August 03, 2012, 07:38:25 PM
 #35

Hey everyone,

I'm happy to announce our exciting new change: hourly options

https://bitcoinopx.com

We've had lots of interest since launching in June, but little volume. This is probably due to our options schedule not fitting in well with the needs of the Bitcoin community. Hopefully that's now changed. People deposit, withdraw, and trade bitcoins on exchanges 24/7, so it makes sense hourly scheduled options might be a better fit Smiley

This can certainly provide leverage as we have option sizes of 1, 10, 100, or 1,000 bitcoins. Mt.Gox currently shows a swing of over $1 in the last 24 hours. Multiplying that by one of the option sizes results in good leverage opportunity.

Details are on our updated How it Works page.

We hope you'll try out our new set up, and let us know what you think.

Happy trading! Smiley
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August 03, 2012, 10:08:05 PM
 #36

We've also added trade examples on our options overview page. Create options from 1 to 24 hours away! Please let me know if you have questions.
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August 07, 2012, 12:31:47 AM
 #37

Update: thanks to user feedback we've now switched to American style ability to exercise options anytime before maturity!

If the market price is above (or below for puts) the strike price you can exercise the option immediately and cash out your payment.

We've also added a handy view all link on the Trade page to see all active options on the same page.
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August 08, 2012, 02:10:40 AM
 #38

dammit, whats with margin trading?
KRONOS!!
BITDAYTRADE!!!!
WHERE ARE YOU??


at least Bitdaytrade is making progress.
I am beta testing the Btc/USD Contract for Difference feature right now
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