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Author Topic: Bitoption.org -- ESCROWED LIVE Bitcoin Options Trading  (Read 35130 times)
bitoption
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May 24, 2011, 05:32:40 AM
 #1

Official Market Status Thread Here: http://forum.bitcoin.org/index.php?topic=12495.0

I'm pleased to announce that Bitoption is generally ready for early adopters. Trades are happening, and so far, nothing has melted! All trades at Bitoption are escrowed, so you need not worry about the reliability or credit of a transaction partner.

For options-savvy traders: read my quick notes at the bottom.

MAJOR UPDATE, WE NOW PRICE IN USD, 1 CONTRACT = 1 BTC. CHECK IT OUT!

To start trading options on Bitcoin / USD, just go to https://bitoption.org and register. Refer often to /faq and /help. I try to monitor this thread and provide support here as well as via email linked on the site in the help section.

What are options? Options are a way to bet on moves between BTC and USD without owning a huge number of BTC (or USD). There are currently options priced in the bitcents that could make you quite a lot of money depending on the swings of the market. Alternately, they're a way to LOCK IN profits you've made trading BTC so far.

Options at bitoption.org are priced in USD. They are trades on BTC. There are two sorts of option contracts available, 'calls' and 'puts.' Options have two prices associated with them; the 'strike' price and the 'bid/ask'. Bid/ask is what you wish to pay or get paid to trade the contract. The strike price is the price that the two currencies will exchange at.

  • Calls give you the right to purchase BTC for a USD at some point in the future. For instance, if you have 100 call contracts at 50 USD strike, you would be allowed to spend 5000 USD to buy 100 BTC any time before the option expiration.
  • Puts give you the right to sell BTC (put it on someone) in exchange for USD at some point in the future. For instance, if you have 100 put contracts at 20 USD strike, you would be allowed to give someone 100 BTC, and receive 2000 USD from them any time before the contract end.


Options trading is complicated; it's hard to get your head around, and you can lose your money quickly if you're not careful. Be careful! We are currently working on better documentation, and many requested new features. So, be patient with us!

Funding Your Account We currently only accept BTC; to get USD (which you'll need to take certain positions), we allow you to exchange on Mt. Gox directly from your bitoption account. This is the only way to get USD in your bitoption account currently. We are testing Mt. Gox "send USD" support and will likely support this soon.

Withdrawing We currently only send BTC out, although it looks likely we will be able to use Mt. Gox' sending facilities to allow you to withdraw funds in USD directly.

Options-savvy notes Trades are escrowed, funds are held in Mt. Gox. Contracts are American style, 1 contract = 1 BTC 1% commission on clearing, 1% for execution. Currently no auto-execution of trades (probably coming). Prices are quoted in USD-BTC We're looking for market makers, email me. No margin accounts, and that's the short version!

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

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bitoption
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May 24, 2011, 05:38:31 AM
 #2

We are a BITCOIN denominated market. That means you pay BTC to do things, you send us BTC, and you get BTC back from us when you withdraw.
Version 1 Info:

We use Mt. Gox for USD conversions, and for instance writing puts; you'll need USD to cover your put, of course! The way we do that is you deposit BTC here, and then convert it when you choose in the amount you choose using our API. We convert it on Mt. Gox for you directly from here, and it shows up in your accounts here as "USD".

There is NO WAY to receive USD from BitOptionMarket currently. Thus, you must convert back to BTC either through a call, or through the Mt. Gox exchange mechanism.

We charge a 1% fee to each party for all clearing transactions. Mt. Gox will charge their then-current rate on USD-BTC transactions, these fees will be netted out of your account.

We do not currently allow margining your account; you must have the BTC / USD to write options.

We (the market) or our owners may occasionally take trading positions, but we will always and only utilize the public API to do so

Options rules:

One contract = 1 BTC. This is contrary to most option markets. Typical reasons for the 100 share size in most markets is getting offer pricing into the penny range. This is not a need for BTC, and so we relax this restriction. We may change this if liquidity is adversely affected.

Options close on Thursday, 00:00:00 GMT only. A request for another date when you 'write' an option will be rounded to the nearest Thursday PRECEEDING your request.

Offer prices are rounded to 4 digits of precision, hence you may bid/ask as low as .0001 BTC

Strike prices are rounded to .05

Hence a request to write a call on Friday May 20 at a strike price of 7.11 with an offer 1.00025 will be entered as
Thursday May 19 7.10 1.0003
in the system.

When a crossing occurs in the order book, the bid or ask price that is EARLIEST is the crossing price.

API Instructions

All requests must be 'gets'
Register at /register
Login at /login, and get the "token". Tokens are good for 24 hours, and you can always get a new one if you lose yours.
/initiateDeposit to send us BTC
/write to write/ask a contract
/bid to bid on one
/allMyContracts to see which ones you own
/exerciseContract to exercise your contract

a list of all api calls is below.


Value Added Providers

We provide a mechanism for you to get commission from us for building applications that rely on the exchange. When you register as a provider ( at /registerProvider) you choose an additional commission to charge all transactions for which you provide your provider token.

Some notes:

We will take 20% of your additional commission, and return 80% to your provider account.
You may only provide your provider token at the placing of an ask (write) or a bid.
We will debit your customer's account the total commission, and credit yours.
We will then debit your account for our 20% stake and credit yours.

A brief Provider tutorial:
customertoken=/login(username:"customer",password:"custpass")
providertoken=/login(username:"me",password:"mypass")
/registerProvider(token:"token",max_commission:.02)
/write(standard_args,provider_token:providertoken,provider_comm:.0015)
/bid(standard_args,provider_token:providertoken,provider_comm:.0012)

Full API
estimateBtcSaleProceeds (btc)
estimateBtcPurchaseProceeds (usd)
register :login_id,password,email(optional):
login :name,password:
convertUsdIfGreaterThan :token,usd,min_dol:
convertBtcIfGreaterThan :token,btc,min_dol:
convertBtcToUsd :token,amount:
convertUsdToBtc :token,amount:
initiateDeposit :token:
securitiesList ::
listContracts ::
listPuts :date:
listCalls :date:
getAvailableUSD :token:
getAvailableBTC :token:
write:(token,type,date,strike,ask,num,underlying="BTC")
cancelOpenOption :token,contractId:
bid:(token,type,strikedate,strike,bid,num,underlying="BTC")
bidCtypeid :token,ctypeid,num,price:
exerciseContract : token,contractId,num="all ::
accountBalance :token:
openContracts :token:
listMyContracts :token:

Future Plans
v2 will allow selling of contracts, rather than just exercising.

Comments Desired!!

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
FreeMoney
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May 24, 2011, 05:52:40 AM
 #3

This looks pretty slick.

I'm constantly excited these days.

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bitoption
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May 24, 2011, 01:48:11 PM
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Thanks, that means a lot!

Today, I hope. Squashing a few final bugs.

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
Garrett Burgwardt
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May 24, 2011, 02:33:07 PM
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I'm wary, but intrigued. After what happened with the Bitcoin Credit Union, well, I'm suspicious of everything that is announced by a member with only a few posts.

But I'll give you a chance Wink
bitoption
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May 24, 2011, 08:34:46 PM
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Thanks! I totally appreciate the reputation questions; overall BitCoin forums have been pretty great, in my experience.

I'm still working on jurisdiction and legality in my home country. Once I'm sorted on that, I'll 'merge' my identities -- in my other bitcoin forum life, I'm a third-tier, been-around-since mid-2010 sort. Smiley

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
darbsllim
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May 24, 2011, 09:00:02 PM
 #7

I'm wary, but intrigued. After what happened with the Bitcoin Credit Union, well, I'm suspicious of everything that is announced by a member with only a few posts.

But I'll give you a chance Wink

What happened with the bitcoin credit union?

Brad Mills
Former miner - Former Bitcoin Business Owner - Victim of the Great Bitcoin Crashes of 2011 and 2012
Garrett Burgwardt
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May 24, 2011, 10:09:28 PM
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I'm wary, but intrigued. After what happened with the Bitcoin Credit Union, well, I'm suspicious of everything that is announced by a member with only a few posts.

But I'll give you a chance Wink

What happened with the bitcoin credit union?

The owner seems to have disappeared with everyone's money.
bitoption
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May 25, 2011, 03:42:59 AM
 #9

Quick updates, and a question:

1) I'm still trying to squash a Mt. Gox exchange bug (critical for launch), after that, I think I will ease us into open beta. Hopefully today; more updates in this thread.

2) I have slotted 1 contract = 1 BTC. Most options markets are 1 contract = 100 of the underlying. Does anyone have a strong opinion on this? Since we clear automatically, I'm not worried about logistics. I am guessing that smaller units per contract increases liquidity, but I'm not really sure. It wouldn't be the end of the world to rebase later, but it would be enough of a pain that I'm curious what people think. Opinions welcome.

Thanks guys! I'm excited!

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
FreeMoney
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May 25, 2011, 03:52:53 AM
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Quick updates, and a question:

1) I'm still trying to squash a Mt. Gox exchange bug (critical for launch), after that, I think I will ease us into open beta. Hopefully today; more updates in this thread.

2) I have slotted 1 contract = 1 BTC. Most options markets are 1 contract = 100 of the underlying. Does anyone have a strong opinion on this? Since we clear automatically, I'm not worried about logistics. I am guessing that smaller units per contract increases liquidity, but I'm not really sure. It wouldn't be the end of the world to rebase later, but it would be enough of a pain that I'm curious what people think. Opinions welcome.

Thanks guys! I'm excited!

I like 1-1.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
bitoption
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May 25, 2011, 07:37:33 AM
 #11

Update:

I have everything working as far as I can tell, internal libraries and web api.

What's left is some niggly stuff:

. Getting a domain
. SSL certificates
. gentle (hopefully!) beta
. urgent contact channel if there are troubles.

More updates here as they come.

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
bitoption
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May 26, 2011, 05:18:51 AM
 #12

Server is up, serving requests
Reverse proxy server (SSL) is working
I'm porting from sqlite to mysql for launch; multi-threaded proxy connections to one sqlite file probably won't work.

Domain name still in works, I will probably launch at an IP address with a domain name to follow shortly thereafter.

It's just like me, I have v2 and v3 features written out, MUST LAUNCH FIRST!! Smiley

At this point, I'm thinking probably in 12 to 18 hours. My internet access is really bad this week, so it's hard to remotely develop, which is the point I'm at now.

----** In Beta: The First Bitcoin Options Market ----**

Explanation and discussion: http://forum.bitcoin.org/index.php?topic=9611.0

API Developer Thread:
http://forum.bitcoin.org/index.php?topic=14194.0

-----------------------------------------------------------
Syncopate
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May 26, 2011, 09:40:50 PM
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If you had enough bitcoins/ cash you could easily take the exact opposite of everyones option and just make a comission fee on every single transaction, thats pretty tight.
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May 26, 2011, 10:20:11 PM
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We REALLY need something like this. In the meantime, while this is in development people can try my "futures" experiment: http://forum.bitcoin.org/index.php?topic=10008.0

I think it should be a good gauge about how much demand there is for bitcoin derivatives.

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May 26, 2011, 10:31:07 PM
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I think a 10 BTC contract would be more useful, as this could be a week's mining for someone slower.

Just doing 1-1 seems a bit weird to me for an options trade.

PGP KEY | 1Bitcoin3Tg2KWyAq3wzivdqwYqGwKYaGd
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May 26, 2011, 10:34:10 PM
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I think a 10 BTC contract would be more useful, as this could be a week's mining for someone slower.

Just doing 1-1 seems a bit weird to me for an options trade.

Might as well anticipate the increase though. Eventually 1BTC will be a good week for anyone. It'll be confusing to switch what a contract means.

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May 26, 2011, 10:47:04 PM
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I think a 10 BTC contract would be more useful, as this could be a week's mining for someone slower.

Just doing 1-1 seems a bit weird to me for an options trade.

Might as well anticipate the increase though. Eventually 1BTC will be a good week for anyone. It'll be confusing to switch what a contract means.

Yeah, I guess you'll just get more options contracts. I'm really interested to see how many people actually use them!

Also, what style options are these? American / European / Japanese / something else?

PGP KEY | 1Bitcoin3Tg2KWyAq3wzivdqwYqGwKYaGd
FreeMoney
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May 27, 2011, 12:03:15 AM
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I think a 10 BTC contract would be more useful, as this could be a week's mining for someone slower.

Just doing 1-1 seems a bit weird to me for an options trade.

Might as well anticipate the increase though. Eventually 1BTC will be a good week for anyone. It'll be confusing to switch what a contract means.

Yeah, I guess you'll just get more options contracts. I'm really interested to see how many people actually use them!

Also, what style options are these? American / European / Japanese / something else?

I expect to lose some money foolishly market making in every contract  Grin

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May 27, 2011, 03:05:12 AM
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I think options are something that BTC could use and should have.  From a quick look at your post I assume these are covered options.  What I am really hoping to see is P2P escrow in place to cover the options so that most of the  3rd party risk could be removed.  As we saw with the credit union we will see more and more of these 3rd party groups do things like this.   Not that I don't trust you mind you.  I still think it's a fantastic idea.  I hope to see a web site interface for it soon.  And if you need a domain I'll provide you a branch of my domain to get you started if needed or just use a no-ip.com address. 

    If you don't know what P2P escrow is or if it's even possible I can tell you that it IS possible with some minor changes to the bitcoin client to add p2p escrow.  I have been talking to other developers and working on making it a reality in the near future in our Freecoin client a branch off the bitcoin client.   We could use more development support and user interest to make it a reality even sooner.   The power is all in your voices.  If you want it, make it heard you want it here in the forums and on the IRC chat channels.

for more info on MultiCoin check out #multicoin chat on freenode , for more info on BeerTokens see the [url=http://forum.bitcoin.org/index.php?topic=9
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May 27, 2011, 09:43:02 AM
 #20

Alright, you are just a tease.

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