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Author Topic: BitLeverage -- A BitCoin Derivatives Market  (Read 3085 times)
fireman
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May 21, 2011, 09:01:16 PM
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Hi, I'm a noob at this forum(just registered), but I've been following the bitcoin markets for a while. Like all good markets,  I think bitcoins should have a futures/options market, so I wrote bitleverage in the last few days.

It's a pretty simple concept, it's just like your regular brokerage account except all the trades are completely based in BTC.
Your account funds are based in BTC instead of USD, and you can withdraw to your mtgox/bitcoin address.

This is still (very) beta, so let me know what you think. Account funding doesn't seem to work automatically - the mtgox callbacks aren't happening, so I'll be updating accounts manually once I see the orders pass through into my mtgox account. I'll start accepting payments directly via bitcoin soon as well. I'd suggest you don't move too much BTC into your accounts yet, until I can iron out some more details. This is more proof-of-concept than anything else.

The futures are currently still not implemented, but I will do that sometime today or tomorrow.

I have options chains going up to Jun 2012, as I wasn't sure if there was going to much activity beyond that time period. If people want different time-period/expiration dates, then I can change those pretty easily.

Almost forgot - the site is at bitleverage.heroku.com

 
The current list of things I have to implement/fix:

- Automatic payment processing from mtgox/ sending anonymously to a bitcoin address.
- Futures
- Implement interest accumulation for amounts that are tied from writing options.
- Allow margin accounts.

Let me know anything you would like to see or any other suggestions.


Thanks,
fireman
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kiba
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May 21, 2011, 09:10:00 PM
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How do we know if your business is not a scam?

fireman
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May 21, 2011, 09:25:06 PM
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How do we know if your business is not a scam?

That's a fair point, and in a system like Bitcoin, where there is no system of financial regulation, it is hard to guarantee that your money is safe anywhere other than your own wallet. However, I'm hoping to show that this is legitimate over time just like your own GLBSE. Also, the nearest expiring option is in 9 days, and people will find out by then whether their contracts are honored.

Because of this, I also made it possible to trade single options instead of the standard of 100 options/contract. This way, anyone can sell options with even with a 1 BTC collateral.

More importantly, I encourage you to not invest in this too heavily and instead just check it out with very little/no funds. This is still very beta, and I'm more concerned with how feasible such a system is and the demand for it than getting a lot of money invested in this right now.

Hope that clears  a few things
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May 21, 2011, 09:27:36 PM
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How do we know if your business is not a scam?

That's a fair point, and in a system like Bitcoin, where there is no system of financial regulation, it is hard to guarantee that your money is safe anywhere other than your own wallet. However, I'm hoping to show that this is legitimate over time just like your own GLBSE. Also, the nearest expiring option is in 9 days, and people will find out by then whether their contracts are honored.

I don't run GLBSE. Nefario already have a reputation when he started GLBSE.

You popped up out of nowhere with only one post.

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May 21, 2011, 10:44:01 PM
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I'll start accepting payments directly via bitcoin soon as well.

that would be best.  especially because of this http://forum.bitcoin.org/index.php?topic=8698.0 
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May 21, 2011, 11:57:41 PM
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I am interested in this.

The offers make me think I don't understand though.

Are the prices really in BTC? Why is 19.8667 the price for the option to buy 10BTC for $1? They all seem wrong like this.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
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May 22, 2011, 12:14:42 AM
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It looks like you're quoting the prices and options strikes in BTC/$ rather than $/BTC which is the reverse of what most people are used to dealing with.

What was the rational for this?

fireman
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May 22, 2011, 07:17:45 AM
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that would be best.  especially because of this http://forum.bitcoin.org/index.php?topic=8698.0 

Thanks, for pointing that out, I had no idea there was such a big exploit in the mtgox payment system.
I'll work on a bitcoin payment system right now.


I am interested in this.

The offers make me think I don't understand though.

Are the prices really in BTC? Why is 19.8667 the price for the option to buy 10BTC for $1? They all seem wrong like this.

 It does seem a bit confusing at first. I agree that the prices right now are very high, but I think that is mostly because of the extreme volatility of the BTC/USD exchange.
As the price stabilizes, I think the option premium's will become lower too. For example, the BTC/USD 0.2 Put for May 31 gives the option to buy 0.2BTC for $1. If someone wanted to go long BTC (i.e - they think  BTC will go much higher than it is currently), and the current rate is 0.15BTC/$1, they can buy the put option and what they are doing is getting their trade leveraged at 0.2/ 0.05, i.e - a 4:1 leverage for the price of the premium.
A seller who is short BTC(or thinks the BTC will not go that high by May 31) can sell this option right now and collect the premium immediately. If he is right, and the option exprires worthless, the seller will gain that premium for simply writing that option.

It looks like you're quoting the prices and options strikes in BTC/$ rather than $/BTC which is the reverse of what most people are used to dealing with.

What was the rational for this?

Thank for pointing that out. I wasn't sure in what direction to go initially - my original plan was to make a anonymous derivatives exchange where the account currency will be BTC. However, you're right that most people aren't used to thinking in terms BTC yet.
 Do you think it will be less confusing if the account funds are still denominated in BTC, but the option strike prices are USD/BTC rather than BTC/USD? I don't want anyone to become confused with the put/call options that way, but if that makes easier for people to conceptualize, then its a easy change to make.

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May 22, 2011, 07:31:37 AM
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How do you determine the amount of margin required for writing options and what happens if it turns out to be insufficient?
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May 22, 2011, 07:43:59 AM
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How do you determine the amount of margin required for writing options and what happens if it turns out to be insufficient?
It seems that 100% margin is required. At the beginning at least, that seems the only way to go about it-

smooth
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May 22, 2011, 08:16:55 AM
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How do you determine the amount of margin required for writing options and what happens if it turns out to be insufficient?
It seems that 100% margin is required. At the beginning at least, that seems the only way to go about it-

Oh I get it.  You can't write naked options at all?  That works.

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