[ANN] Trade Bitcoin Options - BitcoinOPX.com [NOW OPEN]

[BitcoinOPX]

Update: We are now open!

A big thank you to everyone who helped us during Beta testing. Feedback resulted in exciting changes including 24 hour 7 day trading, and formula based escrow requirements to back options. Please see our updated How it Works page for details.

Congratulations to winner Ichthyo, who sent in the most useful bug information. Ichthyo will be sent a 10 BTC prize. Please post your wallet address or reply to the PM I'll send you  

Happy trading everyone!
______________________________________

Greetings!

We are very pleased to announce BitcoinOPX -- a new trading platform for Bitcoin options.

Of course the timing of this announcement isn't optimum because the community is currently coping with a major security incident. This unfortunately reflects somewhat on all Bitcoin businesses.

However, this may be a good thing. For example, at BitcoinOPX we have raised our security consciousness to the highest possible level. The community probably expects nothing less.

I'll outline exactly why we can be trusted below, but first some key points.

1. We are now open in beta test mode. We invite the first 100 people to sign up and help us test the site. A 10 BTC prize goes to the user finding the most (or most severe) bugs as judged by us. If no bugs are found a winner will be chosen at random. Everyone starts credited with 500 BTC and 500 USD (play money).

2. Barring no site issues we will open to the public Monday June 4, 2012.

3. The quickest way to get up to speed is read our How it Works page.

We invite everyone to visit: https://bitcoinopx.com

Update: We now structure options as contract for difference (traders don't have to own underlying bitcoins), and call and puts are equally covered by escrow. Please see the updated How it Works page!



Security

We take security seriously.

One thing we do is link to a Security page in our site's footer. This page describes transparently how we secure our platform. I'll list the points here.

• Most importantly, we don't use a "hot wallet" which has been at the center of security breaches. Options trading doesn't involve heavy transfer of funds based on round-the-clock exchange rates. We do not host bitcoins online, and no funds are stored on the site. Instead, we manually approve all withdrawals in about one hour.
• We use the Armory client cold storage method to store bitcoins which is extremely secure.
• We use secure password management. Passwords are never emailed, and are handled with the highest level of security. Users don't choose their own passwords, which can be weak or unlock their other accounts. Instead strong passwords are assigned, then salted and hashed.
• We do offsite backups frequently.

We've spent a lot of time, effort, and planning to bring easy Bitcoin options trading to the Bitcoin community. Please sign up and help us test as we seek to add a valuable service to the community.

[BitcoinBug]

Good security decisions, thumbs up!

[BitcoinOPX]

Good security decisions, thumbs up!

Thank you. We hope having a transparent Security page is something that is emulated.

[evoorhees]

The site looks beautiful and this is definitely a needed service in Bitcoin land. The fact that you've integrated Armory says good things about you

I'll be trying this later today!

[BitcoinOPX]

The site looks beautiful and this is definitely a needed service in Bitcoin land. The fact that you've integrated Armory says good things about you

I'll be trying this later today!

Thanks, and I agree this service may be welcomed. The site comes directly from my own desire to trade Bitcoin options but having nothing suitable available.

[hazek]

Wow the site looks really beautiful and I commend you for your actions in the security department and wish you all the best!

I'm already trying it out and will let you know how it works.

[BitcoinOPX]

Wow the site looks really beautiful and I commend you for your actions in the security department and wish you all the best!

I'm already trying it out and will let you know how it works.

Thanks! We don't think a few bad hackers should ruin a good thing (Bitcoin) for everyone.

Most of us in Bitcoinland expect the price to shoot up in the future, maybe as soon as a year away. Options can add some interesting opportunities based on that. This is why we make sure they are covered by independent escrow. They are guaranteed to be delivered no matter what price they are.

[apetersson]

what was not entirely clear:

will you yourself be the counterparty in this trade?
or are you also matching buyers+sellers but for options?

[hazek]

Where should the tester leave feedback, here in this thread?

[BitcoinOPX]

what was not entirely clear:

will you yourself be the counterparty in this trade?
or are you also matching buyers+sellers but for options?

Thanks for the question.

Things are not set up for me to be a counterparty, but I could be. The system simply lets anyone create an option then sell it on the open market. Let me walk through an example. You are user-A and I am user-B.

user-A (you) decide to create a CALL 100 option for 1 year from now, with strike price of $5. You don't think much about the future of bitcoins. You think they will hold steady at $5.

You buy 100 bitcoins on Mt.Gox and use that to create your option on BitcoinOPX. You then place that option on sale with a price of $100, which you think is a good deal for having your money locked away for 1 year (20% return if you're right).

user-B sees this option, but I'm a big believer in Bitcoin. I think 1 year from now they will be at least $20 each, probably more like $50. That means I would have the right to buy 100 bitcoins at a cost of $500 at Maturity. However, my projection is their true value would be 100 x $20 (or $50) = $2,000 (or $5,000). That's a profit of $1,500 (or $4,500) if I'm right.

At that rate I think paying $100 for the option is a good deal.

When you create the option the bitcoins are placed in escrow with an independent escrow service. This means all options can be settled, if need be, without BitcoinOPX in the picture at all (say if shut down for legal reasons). However, with things running normally, every Friday when options mature BitcoinOPX requests back the required number of bitcoins from BTCrow, and settles all member accounts appropriately.

I hope that makes sense.

Edit: I changed the above wording to a more logical thought pattern for profit from each user's perspective.

[BitcoinOPX]

Where should the tester leave feedback, here in this thread?

Anywhere you like. You can post here in the thread, send a PM, or email us at info@bitcoinopx.com.

[hazek]

Hmmm don't get me wrong, the site is beautiful but functionality is somewhat unintuitive. For example I don't understand what is the difference from creating an option when I click on "My account" and clicking on "Trade" and making a "Sell to open" order.

For instance I have two orders up right now, one is a 1 call 10 option which I created and was debited from my balance and another for 4 contracts of call 10 at the same strike that didn't get debited from my balance.

The order book is also a bit confusing and the manual updating is a bit annoying. It took me a while to figure out how to use it, especially why the strike price setting is important.


So yea, no bugs so far, I'm just a bit confused between the different actions I can take on the Trade page and on My account page and don't understand why these two aren't simply 1 page together with the order book.

Also you might want to rethink the placement of the reset password link to somewhere a bit more appropriate like next to my username or something.



These are my initial observations which may not carry any weight at all since I'm a noob when it comes to options trading. And another thing that I'd like to see somewhere is an indication when the market is open.

[BitcoinOPX]

Hmmm don't get me wrong, the site is beautiful but functionality is somewhat unintuitive. For example I don't understand what is the difference from creating an option when I click on "My account" and clicking on "Trade" and making a "Sell to open" order.

For instance I have two orders up right now, one is a 1 call 10 option which I created and was debited from my balance and another for 4 contracts of call 10 at the same strike that didn't get debited from my balance.

The order book is also a bit confusing and the manual updating is a bit annoying. It took me a while to figure out how to use it, especially why the strike price setting is important.


So yea, no bugs so far, I'm just a bit confused between the different actions I can take on the Trade page and on My account page and don't understand why these two aren't simply 1 page together with the order book.

Also you might want to rethink the placement of the reset password link to somewhere a bit more appropriate like next to my username or something.



These are my initial observations which may not carry any weight at all since I'm a noob when it comes to options trading. And another thing that I'd like to see somewhere is an indication when the market is open.

This is excellent feedback! Thank you. Let me try and have a look at what  you've done so I can respond.

[hazek]

Another thing I just noticed is that the order book only shows the price of the first (I assume) best priced contract at a certain strike price without showing how many are available. For instance I now created another 5 sell to open call10 orders at a worse price and they aren't shown in the order book.

Also the event calendar is a bit distracting since it has no bearing on the market but it is a calendar and it took me a while to actually read the word "event" and stop thinking it had something to do with finding contracts on other dates, so maybe minimize it or move it something.

[BitcoinOPX]

Hmmm don't get me wrong, the site is beautiful but functionality is somewhat unintuitive. For example I don't understand what is the difference from creating an option when I click on "My account" and clicking on "Trade" and making a "Sell to open" order.

Ok, you have a good point here. You can only "sell to open" when you have something to sell. So placing that type of order without first creating an option wouldn't get executed until you created the option. There should probably be a message indicating this.

For instance I have two orders up right now, one is a 1 call 10 option which I created and was debited from my balance and another for 4 contracts of call 10 at the same strike that didn't get debited from my balance.

Right. The CALL 10 you created is what you have to sell. When you click Trade you are either buying options others have created, or selling options you have created, or selling options others created which you bought but are now re-selling.

The order book is also a bit confusing and the manual updating is a bit annoying. It took me a while to figure out how to use it, especially why the strike price setting is important.

I'm not yet sure how we might improve this. The manual input is only when you first click Trade. If you click a "trade" link in the Option chains chart below it will pre-populate the fields. It will also do this when you click on "sell to open" from the link in My Account for options you have created.

Edit: Ok, I believe you're calling the option chain chart the "order book". I was describing the section to place orders above it. I can see your point about the strike price setting. I'll think on how to improve that.

So yea, no bugs so far, I'm just a bit confused between the different actions I can take on the Trade page and on My account page and don't understand why these two aren't simply 1 page together with the order book.

I'll look at ways to make this clearer.

Also you might want to rethink the placement of the reset password link to somewhere a bit more appropriate like next to my username or something.

Good idea.

These are my initial observations which may not carry any weight at all since I'm a noob when it comes to options trading. And another thing that I'd like to see somewhere is an indication when the market is open.

This was thorough, honest feedback, which makes it extremely valuable. Thank you!

[hazek]

That's ok, I'm sure if you could you'd do the same for me

When creating options could you also give the option of how many option contracts of that type one wants to create so I don't have to create every single options contract separately.

[BitcoinOPX]

Another thing I just noticed is that the order book only shows the price of the first (I assume) best priced contract at a certain strike price without showing how many are available. For instance I now created another 5 sell to open call10 orders at a worse price and they aren't shown in the order book.

Yes the option chain (which you refer to as the 'order book') shows the best priced offer for bid and ask. Showing how many more orders are available is not typically shown in traditional options chains. For example here:

http://finance.yahoo.com/q/op?s=GOOG+Options

Don't ask me why not. We are blazing trails with Bitcoin, so maybe we should consider questioning all kinds of practices

What is shown, however, is the trading volume and open interest.

Also the event calendar is a bit distracting since it has no bearing on the market but it is a calendar and it took me a while to actually read the word "event" and stop thinking it had something to do with finding contracts on other dates, so maybe minimize it or move it something.

Well, options trading is interesting in that the option value is derived from what people think will happen with the price of the underlying asset. A calendar of events which might be perceived to move the real price one way or the other is relevant I think. However, I will consider your suggestion to move or minimize it.

That's ok, I'm sure if you could you'd do the same for me

When creating options could you also give the option of how many option contracts of that type one wants to create so I don't have to create every single options contract separately.

Of course! In Bitcoinland we've got each other's back.

I agree about adding a quantity field there.

[hazek]

Another thing I just noticed is that the order book only shows the price of the first (I assume) best priced contract at a certain strike price without showing how many are available. For instance I now created another 5 sell to open call10 orders at a worse price and they aren't shown in the order book.

Yes the option chain (which you refer to as the 'order book') shows the best priced offer for bid and ask. Showing how many more orders are available is not typically shown in traditional options chains. For example here:

http://finance.yahoo.com/q/op?s=GOOG+Options

Don't ask me why not. We are blazing trails with Bitcoin, so maybe we should consider questioning all kinds of practices

What is shown, however, is the trading volume and open interest.

Hmm that's interesting, slightly confusing but interesting. Obviously I have zero experience actually trading options on a platform so I have no idea how the pros have it setup but it's kind of weird not being able to see the depth of the offers. Also I was thinking maybe you should also give the option of making a market order, not just a limit order.

[Ichthyo]

Hello BitcoinOPX,

now I've toyed around a bit with your site. Looks great this far. Had no problems using it.
I've found some minor or technical issues, I've emailed you those to your support email address.

I'd like to add some notes regarding usability.

(1) Creating options is a bit hidden. If I'm right, its only accessible via "my account". Well thats arguable;
     probably your reasoning was that people more often buy/sell options, then creating options themselves.

(2) Regarding support for people not so familiar with options. How about integrating some kind of calculator,
     or at least displaying an effective base price? For example: If I create an call-10 option @ $4 and then offering
     it for sale at $11.5, then what I'm doing effectively is to sell 10 BTC at a rate of 5.15 -- well, actually I hope
     to do such a deal, and I'll plan it for a future day.

Basically people familiar with trading handle numbers almost intuitively and / or use a calculator frequently. But hey,
why do we have computers today? Why shall I do number crunching in my head or use an external calculator, when
a nifty little javascript could do the calculations for me right in the webpage? Just my €0.02

-- Ichthyo

[BitcoinOPX]

Another thing I just noticed is that the order book only shows the price of the first (I assume) best priced contract at a certain strike price without showing how many are available. For instance I now created another 5 sell to open call10 orders at a worse price and they aren't shown in the order book.

Yes the option chain (which you refer to as the 'order book') shows the best priced offer for bid and ask. Showing how many more orders are available is not typically shown in traditional options chains. For example here:

http://finance.yahoo.com/q/op?s=GOOG+Options

Don't ask me why not. We are blazing trails with Bitcoin, so maybe we should consider questioning all kinds of practices

What is shown, however, is the trading volume and open interest.

Hmm that's interesting, slightly confusing but interesting. Obviously I have zero experience actually trading options on a platform so I have no idea how the pros have it setup but it's kind of weird not being able to see the depth of the offers. Also I was thinking maybe you should also give the option of making a market order, not just a limit order.

Yes, I believe it's because people might place fake bid/ask orders to make it seem they are thinking something about the price they are not. Option value is highly subjective. Open interest for this reason can be a better consideration.

There are many things the platform doesn't currently support which it could. Options trading is perhaps the most complex trading there is (what with straddles, strangles, butterfly strategies etc).  Our aim was simply providing the most basic functional (hence less bug prone) version to start.