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Author Topic: Bitoption.org -- ESCROWED LIVE Bitcoin Options Trading  (Read 36332 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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May 24, 2011, 01:48:11 PM
 #4

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
 #5

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
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May 24, 2011, 08:34:46 PM
 #6

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, Alphabit.fund
Algorithmic Trader - Former miner - Former Bitcoin Business Owner - Victim of the Great Bitcoin Crashes of 2011 and 2012, and the MtGox Heist of 2014
Bitrated user: bradmillscan.
Garrett Burgwardt
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May 24, 2011, 10:09:28 PM
 #8

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.
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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

-----------------------------------------------------------
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May 25, 2011, 03:52:53 AM
 #10

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.

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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

-----------------------------------------------------------
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May 26, 2011, 09:40:50 PM
 #13

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
 #14

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
 #15

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.

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May 26, 2011, 10:34:10 PM
 #16

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
 #17

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?

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May 27, 2011, 12:03:15 AM
 #18

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
 #19

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.
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May 27, 2011, 09:43:02 AM
 #20

Alright, you are just a tease.

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May 27, 2011, 09:21:31 PM
 #21

In less than eight hours, it will be up. Personal commitment to you and me. Smiley It's just down to extremely minor tweaks.

Re: Option type: American.

Re: Covered; right now, you must be able to cover with the underlying. v2(3?) you will be able to buy to cover. Later, it's possible we'll allow more speculative buy/sell, and just close you out when you get close to your limit.

As we all know, BTC make the lending / margining situation much more difficult than in most western countries, so I don't really expect we'll do much margining. It's possible I would eventually pre-auth credit cards against losses, but right now, I just want this thing out the door.

----** 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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May 27, 2011, 09:53:32 PM
 #22

In less than eight hours, it will be up. Personal commitment to you and me. Smiley It's just down to extremely minor tweaks.

Re: Option type: American.

Re: Covered; right now, you must be able to cover with the underlying. v2(3?) you will be able to buy to cover. Later, it's possible we'll allow more speculative buy/sell, and just close you out when you get close to your limit.

As we all know, BTC make the lending / margining situation much more difficult than in most western countries, so I don't really expect we'll do much margining. It's possible I would eventually pre-auth credit cards against losses, but right now, I just want this thing out the door.


Dang. I am so excited to see this running. How are you going to insure yourself against loss of coins? Are you posting bond with someone?

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May 28, 2011, 01:50:31 AM
 #23

In less than eight hours, it will be up. Personal commitment to you and me. Smiley It's just down to extremely minor tweaks.

Re: Option type: American.

Re: Covered; right now, you must be able to cover with the underlying. v2(3?) you will be able to buy to cover. Later, it's possible we'll allow more speculative buy/sell, and just close you out when you get close to your limit.

As we all know, BTC make the lending / margining situation much more difficult than in most western countries, so I don't really expect we'll do much margining. It's possible I would eventually pre-auth credit cards against losses, but right now, I just want this thing out the door.


Nice. Any minute now...

Are you saying requirements won't net out? That seems pretty harmful if so. It seems like that just means we need to leave more with you than necessary, am I misunderstanding?

If I buy a put and sell a call do I need the full size of the call or my max loss?

Any margining should be from a straight loan where the lender takes risk of non payment. I don't think people will care if you are the lender, but not with our money. Perhaps eventually you could come up with a conservative rule set and give traders with extra dough the choice of using their money to lend at interest.

Do you have plans to get less dependent on MtGox? 

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May 28, 2011, 05:58:44 AM
 #24

Any minute now, indeed. Everything looks pretty good, I forgot to implement a withdrawBTC function, so that needs to go in, and I'm writing it right now.

I'm successfully writing, bidding, clearing and exercising contracts right now, plus exchanging on Gox.

Then, one final API check, and we'll be up, BUT you are going to have to write a client, or hand-post to the URLS (not hard to do).

Re: Margin / Balance, etc: I have gone to pretty significant lengths to make sure that the market and each account always stays 'above' water. Lots of assert x > 0 in the code. : ).

At any time, you can call getAvailableBTC(token), or getAvailableUSD(token) and see what your total free, uncommitted balance is. We'll ding you if you try and go over.

The market was also written with every transaction hitting a balance sheet realtime, and I get a notice if the balance sheet doesn't balance.

Put it this way -- I worry about the same thing you all do.

As far as loaning out people's money on the options market, I don't have any plans to do this, and understand completely why this would make people nervous. Right now, it's all hard assets.


----** 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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May 28, 2011, 06:01:39 AM
 #25

Ah, one more non-coding minute wasted talking about Gox:

I do have plans to be less reliant on Gox; we are all really quite exposed there right now, frankly. Those plans include some serious complications, though. I don't think anybody really wants to have to deal with which exchange your underlying assets are on for a single asset class, so getting some transparency there is an issue.

Long term, if I can solve the money transfer business / know your customer / money laundering issues, the sensible thing would be to just be like Gox and take/send wires; we'd then peg to some agreed-on formula for exchange. What I'm doing now is significantly less logistics, so that's where we'll start. : )

----** 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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May 28, 2011, 06:12:20 AM
 #26

Any minute now, indeed. Everything looks pretty good, I forgot to implement a withdrawBTC function, so that needs to go in, and I'm writing it right now.

I'm successfully writing, bidding, clearing and exercising contracts right now, plus exchanging on Gox.

Then, one final API check, and we'll be up, BUT you are going to have to write a client, or hand-post to the URLS (not hard to do).

Re: Margin / Balance, etc: I have gone to pretty significant lengths to make sure that the market and each account always stays 'above' water. Lots of assert x > 0 in the code. : ).

At any time, you can call getAvailableBTC(token), or getAvailableUSD(token) and see what your total free, uncommitted balance is. We'll ding you if you try and go over.

The market was also written with every transaction hitting a balance sheet realtime, and I get a notice if the balance sheet doesn't balance.

Put it this way -- I worry about the same thing you all do.

As far as loaning out people's money on the options market, I don't have any plans to do this, and understand completely why this would make people nervous. Right now, it's all hard assets.



You mean there is no interface? Is that your next work?

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May 28, 2011, 06:16:54 AM
 #27

Ooh, I hate to disappoint you!

I will write a simple client, python based, most likely, just to demonstrate how to use the API. But, >>>it's reasonably well documented, and all the commands have the proper arguments pre-filled on the current documentation, it's not TOTALLY opaque. Just not for non-tech savvy types.

Because anyone can add their own 'provider' commission, I'm hoping someone will punch out an awesome web and client interface; they'll get a cut of any cleared transactions, and I'll get to work on the parts I want to. If that doesn't work, I'll probably put out a bounty for same.



----** 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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May 28, 2011, 07:47:43 AM
 #28

It's up:

https://bitoption.org/


----** 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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May 28, 2011, 08:00:08 AM
 #29

Bitoption.org is officially in beta.

There are instructions available on the site.

Enterprising programmers: make money by building a web interface, registering as a provider, and getting a little bit of commission for every trade made through your website!

Also, build an API for merchants to use to hedge out their risk -- it would be great to sell things for BTC and know you have a week or two to convert to USD, don't you think? This should be built into BTC merchant apis. Again, you could charge for this.

Enterprising Option traders: make money by trading! I will punch out a short example python client soon.

Finally, I'm tired! I will be available by e-mail, but might not read many forum posts in the next 48 hours.

Enjoy! I will likely ask on some early september calls at 10 if there are any BTC bears out there, just to get the ball rolling.

----** 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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May 29, 2011, 03:37:16 PM
 #30

Update: the market has spoken with deafening silence.. Smiley I'll be putting together a web interface in response.

Requests?

----** 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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May 29, 2011, 08:11:45 PM
 #31

Update: the market has spoken with deafening silence.. Smiley I'll be putting together a web interface in response.

Requests?

That's what I'm waiting for Smiley

I figure maybe I could learn to use it as is, but there won't be enough trading partners until it is easy, so might as well wait.

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May 31, 2011, 01:39:50 AM
 #32

Update, we have our first calls posted. Check out https://bitcoin.org/securitiesList

I'm working on the interface spec 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

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May 31, 2011, 01:51:18 AM
 #33

p.p.s, the securitiesList api now lists best ask and bid right in the main list, a little more useful.


----** 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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May 31, 2011, 08:21:42 AM
 #34

https://bitoption.org/securitiesList

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May 31, 2011, 08:31:06 AM
 #35

[{"num_asks": "5", "best_bid": "None", "underlying": "BTC", "num_bids": "0", "num_active": "None", "strike": "12.0000", "closedate": "2011-08-04", "type": "call", "best_ask": "4.0000"}]

So this means someone has offered to deliver a coin on Aug 4th at $12/BTC in exchange for $4 now and is willing to do that for up to 5 coins. Do I have that just right?

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May 31, 2011, 02:30:20 PM
 #36

Yep, and those coins are lockboxed while the offer is open; no reneging or cheating is possible (or at least, should be possible!)


----** 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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May 31, 2011, 02:31:26 PM
 #37

If you wanted those coins at $12, but only wanted to pay $2, you could write a call at that date for 12 strike, and bid $2. Then the bid/ask spread would be $2/$4, and you'd wait until someone agreed, or a new person came in and made a new offer.


----** 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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May 31, 2011, 08:58:31 PM
 #38


That's what I'm waiting for Smiley

I figure maybe I could learn to use it as is, but there won't be enough trading partners until it is easy, so might as well wait.

What he said.

Also, I want to wait awhile and make sure nobody gets their money stolen.

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May 31, 2011, 10:07:37 PM
 #39

I hear that. Keep the questions coming; I'll keep the updates coming. Working on display of quotes and then user system right 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

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June 03, 2011, 09:58:15 AM
 #40

Update: I am SUPER close to having the web interface out the door. Sometime today (GMT).

What's left for an initial humble launch is UI for registering, and hooking up the UI for withdrawing your BTC from the options exchange to the existing API. There are a few niggly backend details to take care of, all told maybe a few more hours of coding, although I have to stop right now for a while.

Also, that call is looking more appealing..

----** 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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June 03, 2011, 10:30:38 AM
 #41

Update:

That call is not appealing, since it is BTC denominated.

I will be bringing the site down briefly today to re-denominate calls in USD; this is a bug.

Owner of the call; I'll get in touch with you to see what you'd like to do.


----** 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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June 03, 2011, 05:01:43 PM
 #42

OK,

I've thought about this some more, and am not sure what to do about it. I'd like some input -- should Calls be BTC or USD denominated, that is, what do you pay with for the right to buy BTC for USD in the future?

What's strange about paying BTC is that you have a very non-linear payout curve; so, for example, your guaranteed loss is 100% at 1BTC price; you're paying that whole coin you'll be able to buy later right up front.

Put this way, 4 BTC for a 1 BTC call is obviously a scam.

Puts have this same element to them.

On the other hand, we won't be accepting USD directly, so I don't want to have to make people convert to USD if they don't wish to (although we do have functionality to support this)

What are other's thoughts on this? Simplest would be to limit asks to 1 BTC for calls and puts, and essentially let caveat emptor.

More complex would be redenominating the offers in USD so that you pay USD for the right buy/sell BTC later.
A little more mindbending would be changing the underlying to USD so that you pay BTC for the right to buy/sell USD later. As it is, you pay BTC to buy/sell BTC later. There's nothing mathematically wrong with it, but it may be a little confusing for an already confusing area of finance.



I'd like input before I re-launch the website.

----** 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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June 03, 2011, 05:35:20 PM
 #43

Update, I've put in a filter to make sure no bids / asks are over 1.0

I'll probably put in a little calculator that says "you'll make money once the price gets to x" as a helper at some point.

As an example, a 12.00 call is in the money right now by say $1. Hence to make a little bit right now, and speculate the market will drop, you should price it at least a bit over 1/12 of a BTC.


----** 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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June 03, 2011, 05:56:31 PM
 #44

I think it would be best to pay dollars for the right to buy (or sell) BTC at some dollar price at some future date.

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June 03, 2011, 07:18:29 PM
 #45

I've gotten a PM requesting the opposite...

I think for launch purposes right now, I'm going to launch with BTC, and add underlying USD support as an early feature, so you can go both ways.

The market can decide. And there should be some nice arbitrage opportunities for bot writers, so everybody will win, hopefully.


----** 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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June 03, 2011, 08:07:29 PM
 #46

People are going to want to buy USD insurance against a total collapse in bitcoin prices. Perhaps these funds could be held in MtGOX USD?

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June 03, 2011, 09:55:53 PM
 #47

Yes,

That's where the funds are kept right now.

So, to be clear, you would pay, say .2BTC for the right to sell at say $10/BTC in 4 months.

Someone would take the other side of this, and say "sure, give me your .2, I'll keep my 10*BTC in USD here."

You would be 'bidding' on a put in this case, and you'd be putting some of your BTC at risk in order to hedge down.

The other side would be 'asking' or 'writing' the put and they'd have USD at Mt. Gox locked off in order to do so.


Whenever you wanted to exercise your put, you'd either transfer BTC into our exchange, or buy a little, and exercise,sell, then rinse/repeat.  This would be a 'naked' put if you didn't have any BTC upfront other than the .2 per contract. It would be 'covered' if you had it, but the system doesn't care if you have the BTC to sell right now; that's your responsibility, and it's yours to exercise if the puts come in as worth something.

----** 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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June 03, 2011, 11:05:49 PM
 #48

Okay, it's up.

It's been a long day, but the v2 release is up at https://bitoption.org

Please go ahead and try it out.

Disclaimers; uneven design, could break.

When I say break, it's much more likely to break by doing what you told it to exactly (I accidentally converted a large number of BTC on Mt. Gox testing it earlier today) than it is to do the wrong thing. I don't believe there are significant logic or finance bugs in it.

Per our discussions, BTC denominated, which means non-linear returns; prices are capped at 1 BTC per contract.

I also update strike price rules for USD to be at the $.50 level, I want to make sure we get a market going.

So, go forth and trade!

Per this discussion, Mt. Gox is used for all the holding of BTC (really, we don't even have a wallet), so that may make you feel better or worse, but that's the situation right now.

We will eventually be able to allow you to withdraw USD from Mt. Gox, but that's a little down the road.

I'm off, but available by email over the weekend. There's an urgent contact form up at /help on the site as well.

----** 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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June 04, 2011, 01:41:31 AM
 #49

Congratulations.

The above mentioned contact form does not appear to exist.  Perhaps that means some even more up to date docs are available Smiley

What are the exact mechanics of expiration? Is there a CBOE style auto execution for longs at expiration?  Is there some brief period near expiration where trading halts?  How do I ensure I am synced to your clock?

Thanks for your efforts.

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June 04, 2011, 03:46:20 AM
 #50

These are all great questions.

So, we probably should halt trading (but not execution) a bit before. I'm happy to take thoughts on this.

Re: auto-execution, I had planned on this being a third-party service, but I'm open to 'auto-execute' if people wish.

One possibility, if you have in the money naked puts, say, is that you may well move the market to out of the money as you execute them. This sort of thing made me think it would be better to let people execute on their own.

I'm planning on adding a third tab to the right side with a list of your options and the choice to execute, should be together soon.

Re: time and date, I'll put up a URL and post on the site so that you can be up to date.

Re: expiration, some time shortly after expiration, non-executed contracts will be deleted, this will free up any funds locked as well.

A few more plans:

On reflection, I do plan on moving to USD-pricing, the system has an 'underlying' security system built in, and I will try and re-work this to use USD. We'll either keep BTC-pricing alongside or sunset, depending on market demand, but I anticipate we'll "lead" with the USD-denominated at some point. This is at least a month away.

On contacting me: admin@bitoption.org


https://bitoption.org/help has API documentation.

----** 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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June 04, 2011, 05:39:50 AM
 #51

Hmm I'm so confused looking at the 5 options currently available. First I only see the type, not the quantity so I have no idea how that works.. Second I don't understand how I can buy an option. Third I don't understand where my money is going to be held and how I can withdraw dollars. And finally I'm really new to this and the whole layout of the sheet is super confusing to me.

Maybe it's just me and it's just something I wont be trading in?

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June 04, 2011, 06:32:53 AM
 #52

So, more options posted will help things a little, but, also we clearly need an FAQ. I'll respond here, and work up to getting a good one.

To describe I'll choose a July 28 bid currently on the site:

Call: Price .005 Strike 20

This is a bid, so someone wants to buy something.

They want to buy a call; a call is the right (but not obligation) to buy at a future date (in this case, any time before July 28)

The price they are agreeing to pay if they exercise the call is $20USD.

They are willing to pay .005 BTC for this right.

So, this is a bet from someone who thinks that it is likely that BTC will be a bit over $20US before the end of July. If bitcoins go to $21 US, they will have paid .005 BTC now (roughly 7 cents US), and they will make $1, so they'll net $.93 USD on their trade.

If, on the other hand, BTC never goes over $20, they will have lost their 7 cents.

A few people might be interested in this call, although perhaps not at this price.

So, let's say you like bitcoins but think $20 will never happen by July; it's too much to imagine. In this case, you could  "write" this call, and pocket the .005 BTC for every contract you successfully write.

What does that mean? that would mean you'd put in 1 BTC for every contract you want to write, then you'd "ask" or "write" the call july 28 $20. Now, let's say you're happy with .005 BTC as a price; it's like free money to you, and you hope you sell a thousand of them, then August 1, you'll do it again, making nice bank on your BTC stash.

You would "ask" .005 BTC for a July 28 $20 call. Bitoption will clear that against the bid. At that point, you have sold an option contract. We mark you as obligated for 1 BTC, and don't allow you to remove it until the call expires or is executed.

You would get .005 BTC transferred to your account, less our fee (1%, min fee .0005 BTC, so in this case, you would get .0045 BTC).

Now, perhaps you like this idea, but you think .005 is too low. You want more back. you could "ask" for a higher price in exchange for locking off your BTC till july. Maybe .1 BTC; perhaps someone will pay that! You would then ask .1BTC for july 28 $20 call. Our form would show, on the left, a bid of .005 and an ask of .1 . You'd then wait until someone came along and either narrowed the bid/ask spread with a new bid, or bought.

Hopefully this helps.

In answer to your 'how many?' question, it's a really good question. Normally market makers fill out these option books, and people buy a few contracts at a time, but each contract equals 100 shares of an underlying. You'd buy one or two, check price, buy more, I guess. In our case, we're an open book trading system, so we're willing to show the whole book, and in fact, you can get it through the API, but it's actually a lot to display through the web interface.

What I'm likely to add is a hover on a given row so that you can see the whole book for that particular contract type. I'm open to suggestions about display.

Hope this has been helpful!

If you're long BTC right now, probably you want to throw out some call bids and see what happens. If you're short, you might want to make some put bids. It would be nice to sell BTC at $20 end of July if you think they'll implode, right?



 

----** 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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June 04, 2011, 07:04:58 AM
 #53

If I may,

  Good work on your Idea. Might I also offer the suggestion of offering Binary Options aka FRO's on your service. This technically doesn't require someone with BTC to be able to purchase them. In other-words, you will have a larger customer base, with out the need for currency transfers to and from BTC.

And correct me if I am wrong, it sounds like you are going to charge a 20% commission. Way to high.

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June 04, 2011, 03:52:15 PM
 #54

Hello BTC_Bear, I hope you come trade with all the bulls!

Our commission structure:

On a crossing: 1% from each party

If you want to become a value-added provider, say with a great website which streams quotes, and allows people better features than our humble one, you can charge a commission, whatever you like, up to 10%. You choose.

We will take 20% of the commission you choose; that's our way of paying for supporting third-party API developers. Of course, you con't have to charge anything.

So, in short, it's 1%.

I really like the binary options idea; I believe it will be easier to understand and trade for people. I'll have to look into how it could be implemented.

----** 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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June 04, 2011, 07:33:36 PM
 #55

Hello BTC_Bear, I hope you come trade with all the bulls!

Our commission structure:

On a crossing: 1% from each party

If you want to become a value-added provider, say with a great website which streams quotes, and allows people better features than our humble one, you can charge a commission, whatever you like, up to 10%. You choose.

We will take 20% of the commission you choose; that's our way of paying for supporting third-party API developers. Of course, you con't have to charge anything.

So, in short, it's 1%.

I really like the binary options idea; I believe it will be easier to understand and trade for people. I'll have to look into how it could be implemented.


Binary options give incentive to try to move the market when the price is close to event price. I'm sure they have some purpose and are fine in super deep markets, but I would avoid them myself.

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June 04, 2011, 07:58:13 PM
 #56

Can you please fix the "forgot password" button, it doesn't seem to work and I've already forgotten what I used when I wanted to briefly try it last night..

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June 04, 2011, 08:49:11 PM
 #57

Hello BTC_Bear, I hope you come trade with all the bulls!

Our commission structure:

On a crossing: 1% from each party

If you want to become a value-added provider, say with a great website which streams quotes, and allows people better features than our humble one, you can charge a commission, whatever you like, up to 10%. You choose.

We will take 20% of the commission you choose; that's our way of paying for supporting third-party API developers. Of course, you con't have to charge anything.

So, in short, it's 1%.

I really like the binary options idea; I believe it will be easier to understand and trade for people. I'll have to look into how it could be implemented.


Binary options give incentive to try to move the market when the price is close to event price. I'm sure they have some purpose and are fine in super deep markets, but I would avoid them myself.

Point taken, however, they allow people without BTC, to get in on the action 'sort of speak'. Not to mention, nay sayers can put their money where their mouth is, to quote an adage. Bears and Bulls can take them out.

My intention, overall, is to make a more complicated market. So, if Bots, drive the price up, others will win. And win the price falls, there won't be just losers. I love Vertical Bear Spreads, it is on of the safest techniques, in a new and volatile market. It allows me to buy insurance on my gains, while protecting from excessive losses. Not to mention, the added liquidity built in. If the market falls deeply, I already have a Buyer, I don't need to wait for one to show up. The biggest problem to this point is Trust on following through with the contract. But if this type of trade was escrowed, it would be a boon for stability.

 We do need however, more exchanges with data feeds, the more exchanges the harder it is to manipulate the market. Which everyone knows can be done pretty easily at this point at the right times. I rely on those who do it. Their patterns are predictable. Just recently this happened as it went up to $18.

On another matter;


 Tcatm, provides a good service, although not 'Level 2' per se. I will eventually provide a live service, as soon as I can finish the FileMaker code for Trading on MTGOX, keeping track of ROI, APR Gains/Losses, Cost Basis, etc... with trades. My intent is to port this over to FM_GO, to put on the IPhone, Apple can't deny their own product. FileMaker.

Detecting Bot activity is getting easier via various methods, some even use signatures. I name the Bots according to their methods determined over a data sample rate on their trades, and sort of reverse out their algorithms. Don't get me wrong, I like Bots, they are 'predictable'.  Unlike humans, that decide on something and then change their mind and use their 'gut' feelings.

Best Regards,

Let me know when you site is ready bitoption, I like the idea and its eventual deployment.


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June 04, 2011, 09:03:40 PM
 #58

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.

1-1 actually makes plenty of sense.  Only US equity markets have the "100 shares per contract" really, and the reason for that is that historically stocks traded in 100 share round lots.

For example, almost all the futures contracts traded at the CME, NYMEX, and a host of other exchanges are 1 contact per option (Corn, Soy, Wheat, Natural Gas, Crude Oil, Gold, Silver, ... the list goes on...) so I'd say the 1-1 is actually the PREFERRED contract multiplier in this case.

--e
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June 05, 2011, 12:43:13 AM
 #59

Hey hazek, email me at admin@bitoption.com with login info and I'll get you sorted.

Forgot password should be working in the next day or so.

I think the binary options would appeal to a lot of people; my first step is to make sure I can do USD-denominated.

bitoption is all escrowed, by the way, the trades are guaranteed.

----** 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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June 05, 2011, 01:59:24 AM
 #60

For BTC expiration price settlement it might be better to use a weighted average of trades over a certain time period at expiration.  This could dissipate manipulation.

It seems to make more sense to have the bids and offers priced in dollars not BTC.   With BTC pricing of bids their relative value changes with the change in the BTC to $ exchange rate.

100 to 1 makes more sense if you are trying to replicate the pricing of option trading in US stocks which most have familiarity.  You could always add options contracts with that multiple later.

How can traders trust you?  Buyers have to make payment up front, and sellers have to transfer BTC as collateral.

Nice work on the project.
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June 05, 2011, 02:38:01 AM
 #61



Binary options give incentive to try to move the market when the price is close to event price. I'm sure they have some purpose and are fine in super deep markets, but I would avoid them myself.

Point taken, however, they allow people without BTC, to get in on the action 'sort of speak'. Not to mention, nay sayers can put their money where their mouth is, to quote an adage. Bears and Bulls can take them out.
 

Binary options aren't special in terms of letting people bet against something. Selling a normal call or buying a put does that already. Binary options bring an "all or nothing" element that encourages people to "push the price over some ledge". It isn't fundamentally bad, but it isn't wise to use them in any size relative to market moving amounts.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
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June 05, 2011, 02:59:17 AM
 #62

I think that their simplicity would appeal to a large segment of the market here.

I'm imagining hourly , daily , weekly, monthly, (yearly?)


----** 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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June 05, 2011, 04:34:09 AM
 #63

I think that their simplicity would appeal to a large segment of the market here.

I'm imagining hourly , daily , weekly, monthly, (yearly?)


Are calls so hard to understand? You are buying the right to buy at X price. Is that harder than you are buying the right to Y if someone trades coins for X price?

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June 05, 2011, 04:52:56 AM
 #64

Binary options are functionally the same as European options.  Options exchanges in the US are dominated by American style not European style options. 
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June 05, 2011, 05:08:03 AM
 #65

Binary options are functionally the same as European options.  Options exchanges in the US are dominated by American style not European style options. 

Wow, I'm confused then. I thought American was exercised anytime, European exercised near expiry, binary only triggered if price is above/below strike at expiry and worth a fixed amount. Correct me please.

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June 05, 2011, 01:40:13 PM
 #66

Binary options are functionally the same as European options.  Options exchanges in the US are dominated by American style not European style options. 

Wow, I'm confused then. I thought American was exercised anytime, European exercised near expiry, binary only triggered if price is above/below strike at expiry and worth a fixed amount. Correct me please.


Ditto ^^

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June 05, 2011, 03:41:48 PM
 #67

An uneducated question here...

Are the trades P2P or do bitoption hold hostage both sides of the trade ?

I'm  thinking about the scenario, i long a call @ 50$ / BTC and the BTC skyrockets to 100$, can the person i bet against "default", or do i have a guarantee by bitoption that i'll get delivered my assets if i excercise ?

Thanks in advance
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June 05, 2011, 06:34:33 PM
 #68

Binary options are functionally the same as European options.  Options exchanges in the US are dominated by American style not European style options. 

Wow, I'm confused then. I thought American was exercised anytime, European exercised near expiry, binary only triggered if price is above/below strike at expiry and worth a fixed amount. Correct me please.

My understanding is European and binary act the same in that either there is a payoff or there is not.  With both there is no exercise prior to expiration.  At expiration they are either worth something or nothing.
The difference being with binary the payoff is fixed, with European the payoff is variable.
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June 05, 2011, 09:22:25 PM
 #69

Binary options are functionally the same as European options.  Options exchanges in the US are dominated by American style not European style options. 

Wow, I'm confused then. I thought American was exercised anytime, European exercised near expiry, binary only triggered if price is above/below strike at expiry and worth a fixed amount. Correct me please.

My understanding is European and binary act the same in that either there is a payoff or there is not.  With both there is no exercise prior to expiration.  At expiration they are either worth something or nothing.
The difference being with binary the payoff is fixed, with European the payoff is variable.

Right, but Euro and American are smooth and binary is all or nothing. The all or nothing gives major incentive to shove the market if it is close. This makes them undesirable to me, but I guess some might want them.

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June 05, 2011, 11:26:02 PM
 #70

bitoption is 100% escrowed; your coins / USD will be lockboxed until and option expires or is exercised.


----** 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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June 06, 2011, 04:02:31 AM
 #71

Update, I'm taking the trading down for 12 hours or so and implementing USD as the underlying trade-against currency.

I went back and forth over taking payment in USD (which would solve the non-linear returns problem), or using USD as the underlying, which also solves the problem, but means you'll be transacting in 1/(USD/BTC rate), so right now roughly .057 or so is an at the money strike price.

In the ends, I have two reasons for moving ahead with using BTC to pay and having USD as the underlying.

The first is, of course, that using BTC for sending and receiving payments is really easy (thanks Satoshi!). Right now, we allow you to exchange on Gox in your bitoption lock-box account to get USD. This is so very much easier than dealing with USD payment problems; just send us BTC, request them, it's all automated, and no problem.

The second is that we're in early stages of working with GBLSE (very early) to get options on other listed securities there, and those contracts will all be BTC-for-some-underlying.

Given those, I'm hoping you all will be patient with me and put up with inverting Gox' quoted exchange rate when you figure out what's in the money or not.

Here's how a call would work right now:

You buy a call at .0571 (BTC/USD) strike price for July 28. You pay .01 BTC per call. (1 contract = 1 underlying = 1 USD). This is a 'short BTC/long dollar' trade.

The exchange rate goes to $5USD / BTC, or in our terms .2 (BTC/USD).

Now, everyone else is buying USD at .1 BTC per, but you have the right to buy USD at .0571. Counting the contract price (and ignoring commission), your cost is .0671.

Let's say you got 100 of these: you then spent 6.71 BTC to buy $100 USD. If you like, you can immediately convert back to BTC and get 10BTC; you have hedged against a BTC drop successfully. If you prefer, you can hold onto the USD, of course.

One thing this means is that if BTC keeps strengthening, we'll be dealing with small decimals. On the other hand, if it weakens, we'll be back to using numbers greater than 1. I'm considering using milliBTC as the unit on the site, happy for input (if it's soon!)



----** 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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broker11
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June 06, 2011, 05:56:16 AM
 #72

The exchange rate goes to $5USD / BTC, or in our terms .2 (BTC/USD).

Why are your terms different than the exchange rate?  Seems like it would make more sense to people to have $ strike prices.
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June 06, 2011, 06:58:49 AM
 #73

It would, if you thought in USD.

I'd like people to think in BTC. As I said above, this also makes it possible to trade options on other denominations easily. For instance, we could have a EUR underlying easily, whereas if it were the reverse, you'd have to go through two conversions.

Alternately, why should you have to deal with USD-BTC exchange rates if you want to buy calls on SIN, at the GLBSE?

Finally, I think that transacting in BTC is marginally legally safer.


----** 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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June 06, 2011, 07:21:36 AM
 #74

MAJOR UPDATE It's up.

To get things rolling, I posted 200 calls at .05 ($20) for July 28. I'm offering .01 BTC per.

Shorts; you could have 2 BTC in your pocket in very short order.

I added an FAQ to the site.

Also, undocumented feature: Click the "bid/ask" and it will give you a full listing of the orderbook.

----** 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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jerfelix
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June 06, 2011, 11:05:03 AM
 #75

Looks pretty cool.

My eyes aren't so good, and I scanned the first and last several posts for the URL, and it took me a while to see it in your signature.  So to help others, I'll post it:
https://bitoption.org/

I didn't see the commission charge listed anywhere in the FAQ.

To get things rolling, I posted 200 calls at .05 ($20) for July 28. I'm offering .01 BTC per.

So let me make sure I understand this.  You are offering to buy a call for .01 (times 200), and you are looking for someone to write it for you (i.e sell it to you).  Is that about right?  And this means that you'd be able to buy 200 BTC anytime between now and July 28 (presumably 2011) from the writer for $20 each.  

So does the writer need to have 200 BTC on deposit with the exchange?

It does sound like an easy way to pick up 2 BTC!  Because I can buy them for 18 now, move them to the exchange, take your 2 BTC.  Even as a bull, it's a good deal - it just caps my gains on those BTC's at $20.  If only I had 200 BTC!  And if only the system had a bit more reputation!



Also, undocumented feature: Click the "bid/ask" and it will give you a full listing of the orderbook.
I can't figure this out.  Please explain.  Do I need to be registered?
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June 06, 2011, 03:17:38 PM
 #76

Re: commission, you're absolutely right, it was listed here, but not in the FAQ. 1%.

The call: each call is for one USD.

So, 200 calls is the right to buy 200 USD at .05 BTC per USD. The writer will need 1 USD in their account per contract they write.

I'm too sleepy to re-confirm that buying these is actually a bullish strategy, but I believed it was when I bid on them.



----** 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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June 06, 2011, 10:19:53 PM
 #77

BitOption: Conventionally, a thread like this would have all the important information in post #1, which would be kept up-to-date. I advise you to edit post #1 in this thread with the following info:

1) A link to bitoption.org
2) A brief description of bitoption.org, and what it does
3) Some simple examples of how to do a couple bullish and bearish trades
4) Update the subject of post #1 (which will change what the whole thread is called)

Almost nobody on these forums will be used to thinking in options, so examples are going to be important.

Also, having to constantly calculate 1/X is really annoying. Can we at least get BTC/USD prices in parenthesis anywhere you display USD/BTC?

Some way to see trading history on the exchange would be really helpful too.

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June 06, 2011, 11:26:53 PM
 #78

Here is my attempt at some examples (IMPORTANT EDIT: My math below is wrong. See post #1 in this thread for correct math. I'm leaving my wrong math below for posterity):

1) The bitcoin ultra-bull: buys 500 puts at a strike price of .02 BTC/USD (The right to buy 10 bitcoins for $500) for 0.1 BTC. When bitcoins skyrocket to $1000 each, he exercises the put, in which case he gets to buy 10 bitcoins at $50 each when they are currently worth $1000 each.
2) The bitcoin ultra-bear: buys 5000 calls at a strike price of 0.5 BTC/USD (The right to sell 2500 bitcoins for $5000) for 1 BTC. . When bitcoins crash to 0.01 each, he exercises the call, in which case he gets to sell 2500 bitcoins at $2 each when they are currently worth 0.01 each.
3) The ultra-bull counter-party need not be a bear, but rather just someone who doesn't think that bitcoins are going above $50 before the option expires. They put their 10 bitcoins in escrow (currently worth < $200), and they either get 10.1 bitcoins back, or $500 USD + 0.1 BTC back. Not a bad deal.
4) The ultra-bear counter-party is just someone who doesn't think bitcoins are going to fall under $2 before the option expires. They put their $5000 in escrow (currently worth < 300 bitcoins), and they either get $5000 USD + 1 BTC back, or 2501 bitcoins

The counter-parties can make a nice steady income just betting against massive changes in bitcoin values. The ones buying puts and calls are essentially playing the lottery - betting on massive changes.

There are a LOT of other things that you can do with options (spreads and such), but this should get people started. Please help me fix any errors above - I am not an expert on options, and I may have gotten something completely wrong.

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June 07, 2011, 01:46:02 AM
 #79

registered... can't log in...  Huh
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June 07, 2011, 02:54:37 AM
 #80

dacoinminster
1) & 2) Any chance of pricing the contract in USD/BTC?  The forum thread called "rally" is about the BTC getting stronger and USD/BTC increasing.  Most look at it this way.
3) and 4) I don't think you get a choice but the contract should indicate whether they settle in dollars or BTC, I assume BTC.
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June 07, 2011, 02:57:07 AM
 #81

dacoinminster
1) & 2) Any chance of pricing the contract in USD/BTC?  The forum thread called "rally" is about the BTC getting stronger and USD/BTC increasing.  Most look at it this way.
3) and 4) I don't think you get a choice but the contract should indicate whether they settle in dollars or BTC, I assume BTC.

I didn't mean to imply that I own this service! The guy who started this thread owns the website. I'm just trying to help people understand how the options work.

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June 07, 2011, 03:03:17 AM
 #82

Dacoin, thanks for the suggestion. I'll shamelessly steal your examples unless you have objections.


@longmarch, make sure you've capitalized your first initial.

----** 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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June 07, 2011, 03:05:30 AM
 #83

Dacoin, thanks for the suggestion. I'll shamelessly steal your examples unless you have objections.


@longmarch, make sure you've capitalized your first initial.

Go for it! I'm just glad you think they are correct.

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June 07, 2011, 03:23:10 AM
 #84



@longmarch, make sure you've capitalized your first initial.

Yes I did... now I've forgotten my password.  Tried a new reg and that's not letting me log in either.

"Login Failed: wrong or nonexistant password or login"


(Correct spelling is "nonexistent," btw.  Because I know you want the site to look it's best. Smiley )
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June 07, 2011, 03:28:10 AM
 #85

BTW, it's a lot more fun to play the lottery than to run the lottery, but it is a lot more profitable to run the lottery, especially when it comes to options.

Smart money is going to be collecting huge money here soon in the form of a "volatility risk premium" on out-of-the-money options (http://www.cxoadvisory.com/volatility-effects/the-why-of-the-volatility-risk-premium/)

Please don't ask me to explain any of this stuff. I'm barely smart enough to link to it.

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June 07, 2011, 03:40:10 AM
 #86

Re: risk spreads: yes. I expect some significant automated trading coming soon; I'm hoping those guys get everybody riled up and using the site.

I made a major update to the initial post; thanks for the tips. dacoinminster; your math wasn't right, you might want to review mine if you've made any trades! I want you to make money. : )

Nonexistence of nonexistant as a word is confirmed. Thanks for the catch.

Longmarch, frustrating! I just registered and logged in successfully with a trial login. I'm guessing (hopefully politely) it's user error right now. I should have password resets running shortly, so you can use your second login (that one had an email attached to it). For my records, what browser/OS are you using? I assume you're using the site, not the API?

----** 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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June 07, 2011, 03:57:55 AM
 #87

I made a major update to the initial post; thanks for the tips. dacoinminster; your math wasn't right, you might want to review mine if you've made any trades! I want you to make money. : )

Thanks for the correction. I didn't trade, because I knew I probably wasn't understanding things well enough. Also, I'm way too chicken to trade bitcoin options. Just owning my few bitcoins is all the excitement I need - the people trading options are going to be a combination of starry-eyed idiots and really smart people with cast-iron stomachs. I'm just smart enough to know I'm not smart enough Smiley

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June 07, 2011, 04:08:40 AM
 #88

I qualify as a super-bull. Why not throw a few BTC into some outrageous trades 6 to 12 months from now? That's my plan once programming slows down a bit.

----** 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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June 07, 2011, 04:29:57 AM
 #89

I qualify as a super-bull. Why not throw a few BTC into some outrageous trades 6 to 12 months from now?

I fear most of us are super-bull or mega-bull, wonder who will be first to place some put asks Wink

btw. a great free tool for constructing option-orgies: http://www.samoasky.com/ and for that matter also for calculating potential income/loss on single options

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June 07, 2011, 04:59:30 AM
 #90

Update: If you click on "USD-BTC" at the top, you can see the prices inverted. Also, Mt. Gox at the money is updated every three seconds now.

You still have to place your trades in BTC-USD, but this helps, I think.

A little bit better every day!

Re: mega-bulls, there are a lot of economists and bloggers who keep promising to take the other side of this trade. I'd love to see a grassroots "come on, put your money where your mouth is" short campaign.

----** 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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June 07, 2011, 05:37:32 AM
 #91

if you're locking up / escrowing funds for the duration of the option, is interest or similar paid?
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June 07, 2011, 07:27:37 AM
 #92


I fear most of us are super-bull or mega-bull, wonder who will be first to place some put asks Wink


http://twitter.com/#!/TYLERCOWEN

"When will there be a market, if only on InTrade.com, to short BitCoin?"

We should tell this guy about bitoption.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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June 07, 2011, 02:16:34 PM
 #93

Totally; tweet away to him.

Re: interest -- nope.

----** 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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June 07, 2011, 04:44:24 PM
 #94

Quote from: bitoption
Totally; tweet away to him.

I don't have twitter, but I think cypherdoc is going to do it.

Quote from: bitoption
Re: interest -- nope.

Sorry, I don't get it.

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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June 07, 2011, 06:41:55 PM
 #95

Andy asked if we pay interest on USD or BTC. The answer is no, sorry to be so cryptic!

----** 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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June 07, 2011, 08:18:17 PM
 #96

I think this is an excellent service idea, and it looks like a pretty good implementation.  But it looks like it's going to be hard to get the ball rolling.  Part of the problem is that you are trying to sell two sides of a transaction to an audience that sits on only one side.  There aren't a lot of bears here, that are willing to bet against Bitcoin.

Here are my suggestions.  Please accept them in the spirit intended... trying to get your service launched.

1) Simplify your offering.  When options are first offered for stocks, typically there are only a few offerings until those get popular.  With options, you have 4 different ways to play them:  [Buy or Write] x [calls or puts].  In addition, you have the strike price and the date, which multiplies your 4 choices times a lot more choices.

To start with, why not have just a few choices:

Strike price=20 calls that expire end of June.   Buy or Write
Strike price=20 calls that expire end of July.    Buy or Write
Strike price=30 calls that expire end of July.    Buy or Write.

You'd be offering 6 things that people could bid on.  No puts (yet).  No variable terms (dates and strike prices) that people can enter.

2) Explain, for the first 6 offerings, what needs to happen for someone to make money, with examples.  Maybe a Javascript calculator that helps new users to plug in some numbers and see what happens in each case.

3) By default, use the Clearcoin escrow service for the first month or so.  Have this as a part of the offering (included in the price of the service).  After a month or two, then make it a chargeable extra.  At that point, people can trust you as the escrow, or trust Clearcoin for an extra fee.  (I'm just trying to think of ways that you can overcome the challenge "why should I trust you?"

4) Market this outside of the Bitcoin forums. "Think Bitcoin is a Pyramid Scheme, destined to fail?  Write some calls, and benefit from your wisdom."

5) optionally.... if you think Bitcoin advocates will be the "easier sell" than Bitcoin nay-sayers, then disregard what I said in item 1, and ONLY offer 6 put choices, and no call choices.  People who write puts would put up the BTC collateral, and people who buy the puts would only have to put up the premium.  Offer the puts in USD, not BTC, as the people who are hard to get in on the transaction won't want to deal in BTC.  Example:  For $4, you can buy the right to make someone pay you $15 for 1 BTC.  If they crash to zero, you'll make $15 (less the $4 you paid).

That's all I have.  Hopefully this will take off!
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June 07, 2011, 09:25:35 PM
 #97


1) Simplify your offering.  When options are first offered for stocks, typically there are only a few offerings until those get popular.  With options, you have 4 different ways to play them:  [Buy or Write] x [calls or puts].  In addition, you have the strike price and the date, which multiplies your 4 choices times a lot more choices.

To start with, why not have just a few choices:

Strike price=20 calls that expire end of June.   Buy or Write
Strike price=20 calls that expire end of July.    Buy or Write
Strike price=30 calls that expire end of July.    Buy or Write.

You'd be offering 6 things that people could bid on.  No puts (yet).  No variable terms (dates and strike prices) that people can enter.

2) Explain, for the first 6 offerings, what needs to happen for someone to make money, with examples.  Maybe a Javascript calculator that helps new users to plug in some numbers and see what happens in each case.

3) By default, use the Clearcoin escrow service for the first month or so.  Have this as a part of the offering (included in the price of the service).  After a month or two, then make it a chargeable extra.  At that point, people can trust you as the escrow, or trust Clearcoin for an extra fee.  (I'm just trying to think of ways that you can overcome the challenge "why should I trust you?"

4) Market this outside of the Bitcoin forums. "Think Bitcoin is a Pyramid Scheme, destined to fail?  Write some calls, and benefit from your wisdom."

5) optionally.... if you think Bitcoin advocates will be the "easier sell" than Bitcoin nay-sayers, then disregard what I said in item 1, and ONLY offer 6 put choices, and no call choices.  People who write puts would put up the BTC collateral, and people who buy the puts would only have to put up the premium.  Offer the puts in USD, not BTC, as the people who are hard to get in on the transaction won't want to deal in BTC.  Example:  For $4, you can buy the right to make someone pay you $15 for 1 BTC.  If they crash to zero, you'll make $15 (less the $4 you paid).

That's all I have.  Hopefully this will take off!

I totally second that, I was thinking similar the other day, with so many choices its hard to get any of the offerings liquid (popular). Would been better at start to even have only 1, a put and a call and one fixed future delivery date. But i'd add that i dont think only offering calls would have much pop. I'm not interested in neither writing nor purchasing calls, i'm bullish but its almost nothing to gain and too much to lose writing them short.

Maybe set 1 strike price that is reasonable and a date that is 30 days from you start it, at start.
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June 07, 2011, 10:24:45 PM
 #98

These are good thoughts.

Another solution would be a market maker; then we can see where the action is. This is what I'm interested in, and I'll happily work with anyone who'd like to make some volume commitments and see some fee benefits from us.

There's a good amount of 'getting the word out' that needs to be done; the market will feed on itself in usefulness as more orders get put up.

As far as increasing liquidity, we're currently focused in on trading end of july only anyway, I think the participants are artificially restricting the dates just to get the ball rolling.

I don't think we should limit strike prices further than we have; I think the most important thing is minimizing confusion for non-savvy traders to the point where there's a market.

I am working through a few this-es and thats with what appear to be some larger traders, and I hope and expect that they'll start participating in the next week or two.

That said, there are $2,000 US in offers on the market right now, roughly. And, there is some trading. There are roughly 200 bids at or nearly in the money if you're short;

At any rate, my big job right now is I think better interface and explanation, plus working with people who will provide liquidity. You know who you are; PM me!

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June 08, 2011, 08:34:47 AM
 #99

Update, here's my tasklist:

A) Switch to USD/BTC pricing (finally got my head around it). All options listed and purchased will continue on.

B) Execute and cancel options

C) Binary options (mostly done, actually)

D) Profit? Smiley

E) Writing

F) Better UI for order filling

There's more activity today, which is fun. I'm seeing some trades roll across. I've had two interested parties contact about market making as well; keep the thoughts coming.

I will likely be moving date restrictions to monthly until the volume grows; more (plus discussion) before that happens.


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June 08, 2011, 10:21:52 AM
 #100

Is there a way to see the history of orders that have been filled, and a list of orders that are open?
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June 08, 2011, 04:57:32 PM
 #101

I'm still having a hard time understanding the process and especially what the numbers in each column actually mean:

Currently when looking at "2011-07-28 -- Asks: 1 Bids: 2849"
CallsStrikePuts
PriceChangeBidAskBTC-USDPriceChangeBidAsk
--0.0010-0.0300----
----0.0350--0.0501-
--0.05000.90000.0400--0.0500-
0.0400-0.24000.0100-0.05000.04000.04000.0400-
----0.0550----
----0.1000----

Sooo... a few numbers, with a lot of "0.something" values.

Some things I don't really get (I'm really NOT intoo options trading, so this might be standard knowledge for someone else):

1) Why are the last 2 rows there? I thought "strike" is a certain value in BTC/USD that is needed to fulfill an option - but there are none on the left and right side!
2) What are the "change" columns for? The values in ther seem a bit arbitrary to me, at least I cannot come up with an explanation when looking at other values in the table for the negative value in "Calls/Change".
3) The "Asks: 1" is probably referencing to the single "Call/Ask" of 0.9. What exactly is now the "bet" of this person/when will it make profit?
4) If I understood it correctly "Call" means buying USD. A call at the strike of 0.04 means, this person wants to spend 0.04 BTC and get 1 USD for these 4 Bitcents between now and July 28th. An ask now means, this person wants to get paid... but in which currency?! Also I don't really get what the 0.05 bid that is against it stands for now - and both are higher than the 0.04 in the "Strike"?!
5) Where do I see how many contracts are behind each value?
6) Why is the table on 2011-07-14 nearly empty and no asks + bids are listed?

It would be really helpful to have at least some currency symbols (like BTC/USD/EUR...) in the table and maybe also some graphical representation (dunno what's standard here) of what people are bidding/asking for.
Also an intelligent mouseover-helper text along the lines of: "Calls/Bid 100 * 0.0010 @ 0.0300 means: 'This person want to buy up to 100 USD at 0.03 BTC a piece (3 BTC total) until [date]. If you agree, the price for this is 0.001 BTC/contract (0.1 BTC for all).'"
I'm not sure if this above interpretation is correct though and also how much/what I'd be charged then though...  Undecided

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June 09, 2011, 05:30:16 PM
 #102

Question for thread participants.

We currently trade BTC-USD. Prices are quoted that way.

Everyone seems to hate this; they want USD-BTC.

That would mean we'd quote like 25.0 rather than .04.


To switch the system over, I would re-author calls as puts, puts as calls, and invert the strike price.

Are people behind this switch?

API users, I don't want to screw you, please let me know if you'd like this. I figure soon is better than late here.


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June 09, 2011, 05:35:36 PM
 #103

sukrim,

1) Is a small interface bug, there used to be options at those prices

2) Change is tracks the price difference between the last two purchases, so you know if the option is trending up or down.

3) The 0.9 ask at a strike price of .04 call is asking for .9 BTC to deliver 1 USD at a price of .04 BTC/USD, or $25/BTC.

Thus if you pay them .9 BTC today ($27 US), they will deliver you $1 US for .04 BTC later. This is not a good deal. See my above note; switching around the display will help these bad deals become more obvious, I think.

4) Bids / asks are in BTC. They're what you pay for the right to exercise at the strike price.

More on this in a bit, have to run now.

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June 09, 2011, 06:17:51 PM
 #104

@bitoption

Why don't just show both columns one with BTC/USD and the other with USD/BTC ?

2 different forms of free-money: Freicoin (free of basic interest because it's perishable), Mutual credit (no interest because it's abundant)
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June 09, 2011, 06:48:46 PM
 #105

Do you have to convert your btc to USD to write a call?

Hal Finney
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June 09, 2011, 06:59:47 PM
 #106

Do you have to convert your btc to USD to write a call?

Yup.
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June 09, 2011, 08:26:48 PM
 #107

We'll eventually be able to accept cash from Mt. Gox; it's just further down my list. One of my goals is to avoid worrying about accepting / clearing USD payments as long as possible.

Let me know if it's a priority for you, though!

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June 09, 2011, 10:54:14 PM
 #108

Update, taking the site down for a bit to fix the directional stuff. Official status thread for the market is here:

http://forum.bitcoin.org/index.php?topic=12495.0

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June 10, 2011, 12:15:24 AM
 #109

It's back up, and now works how everyone thinks it should.

Read the main thread for more, but Strike is now USD, Asks/Bids are USD. Contracts are for USD.

I put in some escrowed trades: super-longs; I'm asking $3 US for $45 calls July 28. 5 Contracts; if you have $15, you'll be able to lock in buying BTC at $45 for a few months.

I will only update market status in our market status thread from now on, but happy to keep discussing this here and elsewhere!

I sent a lengthy update via email to site members, if you missed it, or need more details, let me know. In very brief, though, I canceled all open orders under the old system, so you should have all your available balances right now.

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June 10, 2011, 02:15:10 AM
 #110

I see things have changed on the site

Is a BTC call a call now Like when you buy a call you're betting the price of BTC goes up?

Is a BTC put a put now Like when you buy a put you're are betting the price of BTC to go down?

I assume these prices are in USD now?

Assuming above
Can you go over the exercising of a put option if I was a put buyer that wanted to exercise the put I bought.

If I am paid in BTC as a put buyer who has exercised my put I have a problem in my mind of even making a trade. For one I will be paid in BTC which I think has no value. If the value of BTC is cut in half before I can trade it for cash I could still lose money even though I was right.



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June 10, 2011, 03:40:44 AM
 #111

If you hold a call, when you exercise it you will get BTC in exchange for USD, yes.
Exercising a put gets you USD for your BTC when exercised.


So, you buy a put, perhaps it's at a strike price of $10. You pay US $3 for each put, and buy 100 of them.

You need $300 US in your account; that goes over to the put writer immediately.
The put writer needs $1000 USD in her account; that is locked immediately, and the exchange will hold it until expiration.

Let's say BTC tanks to $5 per. Bummer for everyone else, but not for you! You can now exercise the put and give 100 BTC to the writer in exchange for her $1,000.

You netted $200 in this case.

The put writer traded $700 in the end for 100 BTC.

Does that help?

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June 10, 2011, 03:53:19 AM
 #112

If you hold a call, when you exercise it you will get BTC in exchange for USD, yes.
Exercising a put gets you USD for your BTC when exercised.


So, you buy a put, perhaps it's at a strike price of $10. You pay US $3 for each put, and buy 100 of them.

You need $300 US in your account; that goes over to the put writer immediately.
The put writer needs $1000 USD in her account; that is locked immediately, and the exchange will hold it until expiration.

Let's say BTC tanks to $5 per. Bummer for everyone else, but not for you! You can now exercise the put and give 100 BTC to the writer in exchange for her $1,000.

You netted $200 in this case.

The put writer traded $700 in the end for 100 BTC.

Does that help?


Thanks for clearing this up.
Glad you changed the system to work closer to how things are run on the CBOE.
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June 10, 2011, 04:14:52 AM
 #113

Yes, it makes much more sense now.

I kept the old plumbing, because, for instance, buying options on GLBSE securities makes no sense in anything but BTC. But, I decided that should be my problem, not yours. : )

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June 10, 2011, 10:26:50 AM
 #114

How about letting traders trade BTC/USD on site? Obviously some (most?) trades will need to be facilitated on mtgox, but there could be a coincidence and we could save fees.

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June 10, 2011, 02:48:32 PM
 #115

FreeMoney, nice idea.

We'll probably do that, but I'm trying to stay lazer focused on options until we have things sorted and working well. For now, you can get access to the best depth out there in a very low hassle way, in fact, given that we estimate return from the depth chart before you sell, we do a little better than gox, and all using their depth chart right now.


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June 10, 2011, 04:39:13 PM
 #116

I'm going to vote +1 for showing both rates BTC/USD and USD/BTC.

You might want to add questions from this forum to the FAQ.

Another thing for the FAQ is where the website is hosted. Is hosting in the US a good idea?

You might want a disclaimer about what happens to all the contracts in the event that MtGox gets shut down.


It'd be nice to have a MtGox gets shutdown contract.  Maybe intrade.com would do it - which would separate it from the risk of being part of the bitcoin network AND they have an extremely reputable website.

I like the idea of promoting fixed contracts, but am not sure how to do it (and keep the number of contracts low) as there are two variables.  You could have expiry dates every month, but you'd also need different strike values (from raging bull to sleepy bear).

Don't day trade.
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June 10, 2011, 04:44:52 PM
 #117

Good thoughts. Right now, you can click the USD-BTC title at the head of the strike column and see the inversion.

It's not hosted in the US; not a US company. It's hosted in Germany right now, I think.

Yes, re: MT. Gox shutdown, good thought.

Interesting idea. Essentially, a CDO on Mt. Gox? Insurance, basically.

I have a fixed contract solution, coming soon. I hope. : )

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June 10, 2011, 04:53:40 PM
 #118

A really basic question: can I cancel an offer that nobody has accepted?

If I'm a bull and I realize that it is going to crash, or I'm a bear and realize that it is going through the roof. If I realize this before anyone takes the contract.


Don't day trade.
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June 10, 2011, 04:54:47 PM
 #119

Just noticed that the FAQ still states "You are trading for calls and puts on USD here. You are paying in Bitcoins. That means that a call on USD (1 USD per contract) is the right to buy USD for bitcoins."

Probably want to update that Smiley
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June 10, 2011, 05:00:48 PM
 #120

FAQ updates -- thank you! Haven't gotten to them yet. Will do ASAP.

Canceling open orders will go in today.

I just sold some calls; so, things seem to be picking up. I expect a list of market-maker orders to go in today; that should be exciting!

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June 10, 2011, 06:06:45 PM
 #121

 Please post example trade with call just like put
 example above ? I appreciate your help )

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June 10, 2011, 06:28:31 PM
 #122

So let me see if I understand this correctly.

I have 1 BTC and I write a Call for it with an Ask of 7.10 and a strike of 50 for 7/28/2011.
This means that:

-My 1 BTC will be in escrow until 7/28/2011.
-To buy this Call someone will have to pay me $7.10.
-If on 7/28/2011 the price of BTC is over $57.10 they will exercise the option and buy it at $50.00.  They will save the difference between $57.10 and the current price and I will make the difference between what I bought the BTC at and $57.10.
-If not then I get to keep the $7.10 and the 1BTC.

Is this correct?

(I don't know if these prices are realistic just put some numbers out there, so forgive me if they are ridiculous.)
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June 10, 2011, 06:47:48 PM
 #123

Monte, essentially correct.

I'll re-state for clarity and correctness, though.

-My 1 BTC will be in escrow until 7/28/2011.
-To buy this Call someone will have to pay me $7.10.
-If on 7/28/2011 the price of BTC is over $50.00 <<--
  and they are economically rational <<--
  they will exercise the option and buy it at $50.00. 

They will make the difference between $57.10 and the current price and I will make the difference between what I bought the BTC at and $57.10.
-If not then I get to keep the $7.10 and the 1BTC.


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June 10, 2011, 06:49:32 PM
 #124

I posted this image in another thread to help people understand how to post this trade, by the way: writing a covered call; this is a bet that BTC will still be somewhat valuable, just not $50 valuable in the next two months.


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June 10, 2011, 09:57:09 PM
 #125

Thanks for the help.

Oh by the way guess who was number 100 on the site! Cool
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June 11, 2011, 12:29:12 AM
 #126

Yep, congrats. We passed one hundred registered logins today.


As a side note, I'm seeing some asks in the $50 US range. This doesn't make sense; one contract = 1 BTC. You might as well just buy the BTC if the ask is over market.

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June 11, 2011, 02:29:58 AM
 #127

It appears that in the web UI now the ';my contracts' is hooked to list unfilled contracts but I don't see the a place to display filled contracts.  Probably want that.
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June 11, 2011, 02:55:33 AM
 #128

Yep, congrats. We passed one hundred registered logins today.


As a side note, I'm seeing some asks in the $50 US range. This doesn't make sense; one contract = 1 BTC. You might as well just buy the BTC if the ask is over market.

Bitcoin has high carrying costs, didn't you know?

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June 11, 2011, 04:35:24 AM
 #129

Random, yep, that's right.

FreeMoney -- yep, you need an SSD, a backup SSD, an online backup for your wallet. It adds up!!

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June 11, 2011, 06:46:33 PM
 #130

Good suggestion. I'm currently working on the list of open and active options page, and will be using some logic like this to help people understand what they've got.

As a side note, there's a cheap put in at 6-16 right now; $5 ask, $10 strike. That's $2! Smiley Only one, sadly, but someone should probably pick it up.

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June 11, 2011, 08:38:29 PM
 #131

How high should ask prices typically be? I mean, as far as I get it, they are a small "bonus" for me for keeping these BTC safe over that time frame and/or cover for a few fees (like mtgox conversion) but all I have to do is anyways just post it on the site and I have 0 costs any more.

I'm all for having a few more descriptive charts (or a more descriptive output for beginners) since I see options as a VERY good thing for miners who want to expand their rigs for example and want to make sure at least x% of it can be paid off. On the other hand of course it limits the potential gains of such rallies as until yesterday, but that's a risk some people might like to take still.

It would also be great to see a few more examples as monte posted them and have maybe a few opinions on pricing (is 7 USD as ask price much or not? Would you buy into such a deal?).

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June 11, 2011, 08:57:59 PM
 #132

most options traders use something called Black-Scholes as a baseline for pricing.

I won't comment on how appropriate Black-Scholes is in this case, but I would be surprised if you didn't see some broader orders going in that use this pricing as a metric.

That said, options pricing is tough, in fact Scholes (and one of his buddies, I believe) won the Nobel prize for economics coming up with his options-pricing framework.

I'm still working on making the market work better (just in: check out the new /contracts page, if you're logged in), so I can't say a lot more about pricing right 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

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June 11, 2011, 09:18:37 PM
 #133

I'm totally confused about how to buy an already existing contract.

Do I just place an order that matches the existing contract I want and the system will match them together?

Or is there a way to select the specific contract from the list pf bids/asks and buy it?
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June 11, 2011, 11:23:30 PM
 #134

Hello Bitoption,

Great to have an options site and i'm sure you will earn money.
Four remarks/bugs? and two questions

Remarks
- If I buy an option by covering the ask with my bid price, it buy + the order keeps on buying (bug?)
- If I have a contract I'm not able to sell it by putting an ask price for this contract (bug?)
- My contracts shows my orders, not my contracts (bug?)
- I see no margin requirement/ free cash balance + obligations is wrongly stated (should be only for written options, includes all???)

Quesions
- How can I execute my put option if the BTC price reaches a point belof the strike?
(since in the FAQ you state that they are American and how do you handle expiration)
- How can I manage/ see my contracts (besides history)?

Kind Regards,
Febuz
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June 12, 2011, 12:00:45 AM
 #135

Hello bitoption,

I was thinking, if someone buys that 5$ 10$strike put
And sells one to someone else for 6$
did he
- incurr the 5$ cost + 0.05$(1%) commission?
- and he has 10$ margin requirement?

So his free cash will be balance - (15.05$ instead of correct +0.95$)
This is still a mistake in bitoptoin.org
Or I must be thinking wrong, please let me know

Besides up till the moment of exercise
This market is illiquid since I can still not sell or exercise a contract.


Kind Regards,
Edwin
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June 12, 2011, 01:52:22 AM
 #136

I want to short bitcoins and I'm currently waiting on getting my money into MtGox.

I'm worried that I have to convert my US dollars into BTC as I'm a hardcore bear and think it could drop a lot (and the past several days are either a correction or the sign of a long-run bear market).  How long would my money have to be in BTC?

Unfortunately there isn't the volume of options that I'd like and this increases the length of time my money would be in BTC.

I guess I missed out on the ideal shorting situation which was when the price was rising (and the short contracts would have been cheap).

Side Note: I can EDIT my posts. But I cannot make new ones!  The "REPLY" link is gone.  The "NEW Post" link is gone.  Very very weird!


Don't day trade.
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June 12, 2011, 03:57:40 AM
 #137

Hi all,

I'm working furiously on the following things:

1) Listing Active Contracts
2) Hooking up exercising to the web interface
3) re-listing your options for sale

@nrd52, I think what you should do is bid on cheap puts. You can send me USD via mt. gox' send USD interface (to admin@bitoption.com) and you'll never have to touch BTC until you decide you want to exercise your puts.

If you bid on puts, we'll just take your cash and transfer, no escrow on your side, no BTC necessary.

As far as the market being thin, it's less thin than yesterday! I'm sure a large volume of bids will help. Smiley Gotta start somewhere. You could also advertise your puts; I think that the escrowing means people are more likely to do such a deal than just on rep in the forums. Hope this helps.

I have to hold other mechanics-type conversations for a bit so that I can get things sorted out on the site, sorry!

----** 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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June 12, 2011, 05:42:14 AM
 #138

OK,

If you login and click "Contracts" You should see a list of all active contracts and open contracts, you can exercise / cancel them, (depending on if they're active or open).

I have slightly better error warnings put in in a few places.

Re-listing options will happen soon, through the /contracts page, you'll be able to 'sell' an obligation.

----** 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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June 13, 2011, 03:53:20 AM
 #139

Fellow Option traders, I've been watching the market for a bit now, and have come to some conclusions:

1) I'm having a lot of fun! I hope you are as well. I have written and purchased some nice options, and enjoyed it immensely.

2) Liquidity, it's a problem. We're still early days, but I am thinking hard about this, and have some thoughts and questions below.


So, liquidity. There are three ways that I can think of to increase liquidity:

A) Increase number of trading partners
B) Increase desirability of underlying
C) Limit number of ways to buy underlying

I'd like some feedback as to which of these I should approach next: I have a proposal for each.

A) As far as increasing number of trading partners, the best thing I think I could do would be to open source a market-making bot; it would use some very basic math to place trades. Everyone would be welcome to download and use. Because the BTC is SO volatile, it's really hard to post orders and leave them out there. The 24/7 market thing makes it worse, too; it could be midnight GMT when the bad shit goes down. No fun. This means that if you want to buy / sell a few options, you're essentially going to be fill-or-kill on them; you shouldn't let them float out there for long without a computer to mind them for you. So, this would enable you all to be that market-making sort.


B) With this sort of volatility, I hate to say it, but American options stink. European would probably let everyone sleep a lot better, as far as I can tell, and be a lot easier to value. I think this would increase everyone's interest in having them, (and of course, you could still daytrade them if you wanted!)

Secondary thought here - the market still needs to allow you to resell your contracts, this would help as well, but doesn't address the big picture.


C) We can get more depth by shrinking the number of possible lines that can be traded. I am considering $5 increments and monthly right now.

I have also been working on an hourly /daily binary market, so that could help people make short-term swing bets if they liked, while keeping the (hopefully) more useful larger market for what it's intended: hedging risk and wild speculation.

Please give feedback here!

Thanks!

----** 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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June 13, 2011, 05:11:47 AM
 #140

A) Excellent. I just can't make my best offers because I want them to float with the price. I'm only putting in offers I won't mid getting executed at a much different bitcoin price because I can't monitor it constantly. I would love a simple bot that let me put in a price based on a few relevant variables.


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June 13, 2011, 05:18:59 AM
 #141

B) It isn't a huge deal to me, but maybe I haven't thought enough about it. I certainly wouldn't mind European instead. I think it's too early to do both, decreasing liquidity and complicating things.

C) I think weekly is good. A month is so long in bitcoin time. $5 is good when it represents 10%, but not when it's 50%. I don't know the simplest way to pick the right points, but it should be like:

$1
$1.25
$1.50
$2
$2.50
$3
$3.50
$4
$5
$6
$8
$10
$12.50
$15
$17.50
$20
$25


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June 13, 2011, 05:32:04 AM
 #142


2) Liquidity, it's a problem. We're still early days, but I am thinking hard about this, and have some thoughts and questions below.


So, liquidity. There are three ways that I can think of to increase liquidity:

A) Increase number of trading partners
B) Increase desirability of underlying
C) Limit number of ways to buy underlying

I'd like some feedback as to which of these I should approach next: I have a proposal for each.

A) As far as increasing number of trading partners, the best thing I think I could do would be to open source a market-making bot; it would use some very basic math to place trades. Everyone would be welcome to download and use. Because the BTC is SO volatile, it's really hard to post orders and leave them out there. The 24/7 market thing makes it worse, too; it could be midnight GMT when the bad shit goes down. No fun. This means that if you want to buy / sell a few options, you're essentially going to be fill-or-kill on them; you shouldn't let them float out there for long without a computer to mind them for you. So, this would enable you all to be that market-making sort.


B) With this sort of volatility, I hate to say it, but American options stink. European would probably let everyone sleep a lot better, as far as I can tell, and be a lot easier to value. I think this would increase everyone's interest in having them, (and of course, you could still daytrade them if you wanted!)

Secondary thought here - the market still needs to allow you to resell your contracts, this would help as well, but doesn't address the big picture.


C) We can get more depth by shrinking the number of possible lines that can be traded. I am considering $5 increments and monthly right now.

I have also been working on an hourly /daily binary market, so that could help people make short-term swing bets if they liked, while keeping the (hopefully) more useful larger market for what it's intended: hedging risk and wild speculation.

Please give feedback here!

Thanks!


I agree with all of the above. But i'd like to add also, instead of/in addition to a trading bot, add some buttons next to the calls and the puts called "Trade", that button would then fill out for me the following: "Call/Put"-field, Expiration date, and Strike price. Then i only need to choose "buy/sell" and the bid/ask. Would make it a lot easier for ppl to place orders, filling out those fields once is ok, but doing it over multiple contracts and with the volatility we have multiple times a day is a real undesirable thing to do.

Another thing of increasing ease of use. Under My Contracts, i'd suggest that we also are allowed to "adjust bid/ask" in addition to canceling them
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June 13, 2011, 05:34:10 AM
 #143

These are good thoughts. We could also do a simple 'cancel if under / over' essentially a stop-loss for bids and asks.

----** 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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June 13, 2011, 05:46:27 AM
 #144

These are good thoughts. We could also do a simple 'cancel if under / over' essentially a stop-loss for bids and asks.


That would be great.

A few other things.

I'm tired of logging in every 3 minutes. It won't remember me either. My computer is secure, just give the option to leave me in until I manually log out.

Why does placing a bid take up to 30 seconds to register? That can't be right. I click and I don't even know if it accepted my click or not because the button is flat and I get no message. If it has to be slow for some reason at least give an instant "processing" message.

Why not just give a deposit address and leave it visible? Bitcoin-central and mybitcoin do this and I love it. I hate how MtGox does it. Make a button to get a new one for people who care.

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June 13, 2011, 05:48:59 AM
 #145

Ah, another thing, it seemed like I couldn't make a bid if my bids totaled more than my balance. This actually hurts liquidity and isn't necessary. I could make a bunch more bids if it just knew to withdraw some bids when I ran out of money.

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June 13, 2011, 06:00:48 AM
 #146

So, I understand the bidding with what you don't have argument, but that system can be abused by griefers easily. Nefario recently took GBLSE down over this behavior: offers to sell 9999 shares of a security; unfunded, couldn't actually execute on them, but... bad for market analysis and annoying to people trading.

I took the approach that every bid/ask is a firm offer, and funded. I think we'll stick with that for now.

Re: Bidding; I agree, it takes too long. I'm not sure why; will look into it.

Re: Deposits, since we piggy-back on Gox' system, for now, we have to use it. But I agree it's annoying!

Re: Sessions, that's bugging me too. It should be set to like 4 hours. I updated a configuration item. Sessions should now last a really long time.

----** 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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June 13, 2011, 06:16:52 AM
 #147

I check your site all the time, great work. Due to the extreme volatility, it is too difficult to leave an order out there, but I caution against offering a service that cancels orders based on mtgox price. Too much risk for bitoption.org.

I'll contribute 1 btc bounty for a very basic functioning bot that you approve. Please include a basic BS model.

I like your API, I place all orders with it using an excel spreadsheet. I don't place orders through the browser.

Suggestion: fees - 0% if you make the market, but 2% if you hit the bid/offer. Give an incentive to market makers and bot writing. The people who wait for a huge move and pick off orders should pay the fee.

best of luck with the site.

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June 13, 2011, 06:20:27 AM
 #148

So, I understand the bidding with what you don't have argument, but that system can be abused by griefers easily. Nefario recently took GBLSE down over this behavior: offers to sell 9999 shares of a security; unfunded, couldn't actually execute on them, but... bad for market analysis and annoying to people trading.

I took the approach that every bid/ask is a firm offer, and funded. I think we'll stick with that for now.

Re: Bidding; I agree, it takes too long. I'm not sure why; will look into it.

Re: Deposits, since we piggy-back on Gox' system, for now, we have to use it. But I agree it's annoying!

Re: Sessions, that's bugging me too. It should be set to like 4 hours. I updated a configuration item. Sessions should now last a really long time.


Ah, I overlooked that. What about a small multiple (3x?) and don't let the bids in one contract surpass the free cash so traders know they could accept that whole offer?

If it has to stay as is it's not that big of a deal. I don't want to raise cash by selling coins to place offers that will probably not get taken, but I can sell puts eventually.

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June 13, 2011, 06:22:08 AM
 #149


Suggestion: fees - 0% if you make the market, but 2% if you hit the bid/offer. Give an incentive to market makers and bot writing. The people who wait for a huge move and pick off orders should pay the fee.

best of luck with the site.

I second that. It isn't that you don't deserve fees, it's just that you can get so much more by waiting until you have something good to sell, liquidity.

I gave this same advice to MtGox, seems to have worked  Wink

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June 13, 2011, 06:38:04 AM
 #150

So TTbit, how do you suggest we implement the commission-free side of things? I am totally willing to do it. Normally I think of Market makers as getting a cut in exchange for keeping up some minimum volume and spread commitments.

Suggestions?

----** 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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June 13, 2011, 07:20:26 AM
 #151

Hey, I'm interested in this---I've bought put options in the past as 'insurance' and I may do so again. Or I may start writing calls as opposed to leaving outrageously high asks on Mt Gox 'just in case'.

This question may have been asked already, but I didn't notice an answer: am I able to resell option contracts? I.e. can I buy a call option at a $1.0 premium and then resell it at a $1.5 premium if the exchange rate goes up, without actually escrowing any of my own bitcoins? If not, consider this a feature request.

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June 13, 2011, 07:23:01 AM
 #152

So TTbit, how do you suggest we implement the commission-free side of things? I am totally willing to do it. Normally I think of Market makers as getting a cut in exchange for keeping up some minimum volume and spread commitments.

Suggestions?

I'm not sure what TT meant, but I was suggesting turning fees off until there is actually a market for you to pull fees off of. Later you can give a cut to keep market makers from going elsewhere or whatever.

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June 13, 2011, 07:25:48 AM
 #153

I'm still getting logged out, has it not taken effect yet?

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June 13, 2011, 07:33:44 AM
 #154

sounds like a session bug.

I've got it on the list, will keep you posted.

----** 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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June 13, 2011, 07:37:20 AM
 #155

I think TTBit was suggesting that adding liquidity, e.g. making a new offer, perhaps making the best current offer (bid/ask) is rewarded with a 0 commission status. Buying such an offer is charged commission, but I'd like to make sure I understood how he thinks of it.


----** 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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June 13, 2011, 03:13:30 PM
 #156

Looks like there were some insane price swings over the last few days. Did anybody make a killing trading options during that time?

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June 13, 2011, 03:37:45 PM
 #157

Any ETA on getting USD out? Right now writing calls is extremely stupid IMO until this is implemented.  example the current price is $10 per BTC I write a call with a strike price of $15 and expiration 1 month in the future premium is $1.  30 days later the price is $32 it gets executed I get $15 + my premium was $1 giving me $16.  Although I technically made a 60% profit in a month's time which is great I am forced to exchange from BTC which would make it .5 BTC which is a 50% loss.

Names do not matter; however, if you insist...id...
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June 13, 2011, 03:45:49 PM
 #158

Hey Demonofelru,

You can send us USD through Mt. Gox' send USD, and we will (manually) send you out USD using the Mt. Gox send cash-to-an-email functionality. Just email me at admin@bitoption.com.

----** 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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June 13, 2011, 04:20:37 PM
 #159

I _THINK_ the session bug is fixed now.


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API Developer Thread:
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June 13, 2011, 05:32:27 PM
 #160

I think TTBit was suggesting that adding liquidity, e.g. making a new offer, perhaps making the best current offer (bid/ask) is rewarded with a 0 commission status. Buying such an offer is charged commission, but I'd like to make sure I understood how he thinks of it.



That makes sense for driving surface spreads together, but every offer adds depth.

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June 13, 2011, 05:55:52 PM
 #161

OK, so we could just take commission on any offer that picks up other offers. Unfilled offers get no commission. I'll have to see what that would take on the backend. My gut is that it won't be too difficult.

I no longer believe the session bug is fixed.

----** 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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June 13, 2011, 06:02:41 PM
 #162

I think you an gain adoption by catering to the newbie (like me). I do not understand options well and the site would have to guide me really well. Maybe make a dedicated page where the user can input date, strike and price of option and a JavaScript chart immediately updates to tell what this means for different price outcomes.

Feature request two: Give me an input table with 3 columns [Date, Min Price, Max Price]. The user can then enter up to 10 different dates and tell what he thinks in which range the price is going to be with 90% certainty. This wizard should generate a bunch of contracts that make the user money if he is right and lose his money if he is wrong.
This input format would remove the need to know anything about options. The user tells his opinion about the market 1, 2, 3, ... month in the future and you figure out all the math.

Feature #3: Allow orders to be cancelled after X hours automatically. That way we can risk leaving it in for 3 hours without looking.



I imagine sites spring up using bitoption to hedge themselves with names like "Bitcoin Guarantee" and "Easy Option" that have very friendly interfaces and a restricted set of options and do good hand holding.

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June 13, 2011, 06:15:25 PM
 #163

That would be fabulous..

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

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

API Developer Thread:
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June 13, 2011, 07:17:28 PM
 #164

I'm waiting on my bank transfer (IngDirect) to Dwolla. So far it has been 3 days and they are predicting 5 days.

I'd think IngDirect, an online bank, would be faster...

Steps
1) get dwolla
2) verify bank account for transfers to dwolla (1-2 days)
3) send money to dwolla (3-5 days)
4) get mtgox
5) send money to mtgox (hopefully <1 day)
6) send money from mtgox to bitoptions (hopefully <1 day)

Don't day trade.
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June 13, 2011, 07:25:05 PM
 #165

I'm waiting on my bank transfer (IngDirect) to Dwolla. So far it has been 3 days and they are predicting 5 days.

I'd think IngDirect, an online bank, would be faster...

Steps
1) get dwolla
2) verify bank account for transfers to dwolla (1-2 days)
3) send money to dwolla (3-5 days)
4) get mtgox
5) send money to mtgox (hopefully <1 day)
6) send money from mtgox to bitoptions (hopefully <1 day)

I'm in the same boat. Serves me right for trying to transfer money just before the weekend.

Hey, maybe the market will take a dive again while we wait!
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June 13, 2011, 07:50:06 PM
 #166

Not sure if it is just me or more general, but after I submit an order on the website, the balance "tab" seems to be a noop until I shift away from the page (i.e. select my contracts).

Edit: Unless you rapidly responded and tweaked the code, I'm pretty sure it's just me.
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June 13, 2011, 08:02:19 PM
 #167

That would be fabulous..

Don't rely on it.

I would actually use the exchange to buy some nuclear long options if I had the time to study options and to the calculations.
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June 13, 2011, 08:18:09 PM
 #168

Hans, as you say!

However, we'll get there; there will be a tipping point in terms of usefulness, and until then, it will take a little more work to make the money.

Re: Money, yes, if you have no BTC, it takes some time to get some, and then send over. I'm guessing you guys are super-bears, so you only wish to be in BTC for a few moments max.


----** 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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June 13, 2011, 08:45:26 PM
 #169

Thanks for the service bitoption! I'm having fun playing around with a few bitcoins. One question: (This is probably a dumb question, but I'm just learning about options and haven't figured out all the proper terminology.) On the "My Contracts" page what is "Est. Value"? Is that short for "Estimated Value of the Contract"? If so, how is this calculated? Is it based on current BTC/USD rate, or recent prices of similar contracts?

Thanks.
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June 13, 2011, 10:39:47 PM
 #170

Hans, as you say!

However, we'll get there; there will be a tipping point in terms of usefulness, and until then, it will take a little more work to make the money.

Re: Money, yes, if you have no BTC, it takes some time to get some, and then send over. I'm guessing you guys are super-bears, so you only wish to be in BTC for a few moments max.

If you are interested in my use case: I believe btc will gradually rise over the next 5-10 years to 200k$ per btc. I would like to purchase options which will explode like an atomic bomb if my expectations are met - and fizzle in all other cases to 0. Once I figure out how to do that I will purchase. I would also agree to buy a contract for a shorter term but because btc is very volatile this is risky - and it would have to be far better than just buying btc directly.
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June 13, 2011, 10:46:51 PM
 #171

Hans, as you say!

However, we'll get there; there will be a tipping point in terms of usefulness, and until then, it will take a little more work to make the money.

Re: Money, yes, if you have no BTC, it takes some time to get some, and then send over. I'm guessing you guys are super-bears, so you only wish to be in BTC for a few moments max.

If you are interested in my use case: I believe btc will gradually rise over the next 5-10 years to 200k$ per btc. I would like to purchase options which will explode like an atomic bomb if my expectations are met - and fizzle in all other cases to 0. Once I figure out how to do that I will purchase. I would also agree to buy a contract for a shorter term but because btc is very volatile this is risky - and it would have to be far better than just buying btc directly.


This is more or less my situation (but with a different price target). If I saw options to sell bitcoins at $50 to $100 each three years from now, I would be very tempted to put some money down.

I should add that before I would put significant money into a system like this for a significant time, I would want some assurance that the person running it isn't going to just disappear with the bitcoins someday. For instance, posting bond with a trusted forum member would be a good start. I did that for my own little futures experiment (see sig).

To get really big, you are going to have to develop big trust somehow. I have no idea what that would take, but I know you haven't earned it yet.

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June 13, 2011, 11:12:33 PM
 #172

Hans, as you say!

However, we'll get there; there will be a tipping point in terms of usefulness, and until then, it will take a little more work to make the money.

Re: Money, yes, if you have no BTC, it takes some time to get some, and then send over. I'm guessing you guys are super-bears, so you only wish to be in BTC for a few moments max.

If you are interested in my use case: I believe btc will gradually rise over the next 5-10 years to 200k$ per btc. I would like to purchase options which will explode like an atomic bomb if my expectations are met - and fizzle in all other cases to 0. Once I figure out how to do that I will purchase. I would also agree to buy a contract for a shorter term but because btc is very volatile this is risky - and it would have to be far better than just buying btc directly.


This is more or less my situation (but with a different price target). If I saw options to sell bitcoins at $50 to $100 each three years from now, I would be very tempted to put some money down.

I should add that before I would put significant money into a system like this for a significant time, I would want some assurance that the person running it isn't going to just disappear with the bitcoins someday. For instance, posting bond with a trusted forum member would be a good start. I did that for my own little futures experiment (see sig).

To get really big, you are going to have to develop big trust somehow. I have no idea what that would take, but I know you haven't earned it yet.

While I wouldn't trust you [bitoption] with a huge amount yet, you are earning trust with me. I really appreciate all the communication and constant improvements. I can tell you are in it for the long haul.

I want to clarify something about the counterparty risk. We obviously have to trust you, but is MtGox ever holding our bitcoins? Or just our dollars? It isn't that I don't trust them, I just want to know how much I've got with them total.

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June 13, 2011, 11:15:13 PM
 #173

This is more or less my situation (but with a different price target). If I saw options to sell bitcoins at $50 to $100 each three years from now, I would be very tempted to put some money down.

I replied here: http://forum.bitcoin.org/index.php?topic=7985.msg215208#msg215208 What is you price target then? Your calculation suggests that it might be more than mine. Anyways, it is enough.


I should add that before I would put significant money into a system like this for a significant time, I would want some assurance that the person running it isn't going to just disappear with the bitcoins someday. For instance, posting bond with a trusted forum member would be a good start. I did that for my own little futures experiment (see sig).

To get really big, you are going to have to develop big trust somehow. I have no idea what that would take, but I know you haven't earned it yet.

I fully agree. That would actually prevent me from signing a long term contract. Especially if the other guy would have to pay me 10m$ because I am right. He would just not do it.
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June 13, 2011, 11:18:03 PM
 #174

I think I already asked this, sorry if I missed the answer.

Could you easily implement straight BTC/USD trades on site without going through MtGox? You would still use them for moving the USD, but there doesn't seem to be a need for me to always do a market order over there with a fee when another bitoptions customer will probably come along soon wanting the other side.

It would be nice from a convenience angle too. I didn't want to sell when the price was $13 so I had to wait until it was high AND I was available. If I could have just placed an ask at $20 it would have been filled the next time I came to trade.

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June 14, 2011, 06:10:26 AM
 #175

Hey Demonofelru,

You can send us USD through Mt. Gox' send USD, and we will (manually) send you out USD using the Mt. Gox send cash-to-an-email functionality. Just email me at admin@bitoption.com.


Awesome! Thanks for the fast reply, just made your service so much more attractive to me.

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June 14, 2011, 06:12:35 AM
 #176

watching thread.

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June 14, 2011, 09:27:07 AM
 #177

Just put in a few trades. We'll see how this all works out. A couple of things:

First, I think the american options should stay. I know they are hard to manage with the volatility, but otherwise it seems like a crap shoot. I can feel 50% confidant that bitcoins will trade over $30 sometime in the next month, but whether it'll be above $30 in exactly a month seems far too shaky and dependent on rumor and naive speculation.

Second, I would really like to be able to exchange my USD when I don't have enough for a full bitcoin. It seems like often when I'm asking on calls, my math is often based on being able to reinvest the USD I get into bitcoins. If someone buys my $5 call, I want to be able to invest it into .25 bitcoins. This helps me raise the "break even" price, because as bitcoins go up, putting me in a worse position, the .25 bitcoins I purchased are also going up in value. There currently doesn't seem to be the volume to guarantee that I can get enough USD to buy a full bitcoin, so in the meantime, I would like to be able to purchase (and perhaps sell) fractions of a bitcoin. Just like I can at mt gox.

Also if I'm biding on a call, there is often low volume, so I can only get a couple at $2. But in order to have any cash I have to break a full bitcoin. Then I have $15-$20 left over, and it isn't enough to buy a full bitcoin. This makes it so that my hoped for scenario of bitcoins going up may actually cost me compared to leaving the bitcoin because I have some spare USD instead of .8 bitcoins.

I hope that all makes sense, I'm not sure if I'm up on the lingo.


EDIT: I thought of a feature I'd like to request. I'll like to be able to fill of bid or ask in existence by just clicking on it. Right now when you click on a bid or ask you see the amount available and other prices behind them. In this window I'd like to be able to click a "fill" button. This way, if I want to fill the order I don't have to enter all the exact same data into the order field.

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June 14, 2011, 07:25:15 PM
 #178

Things in progress right now:


. "Pick up" a bid/ask directly from the board
. rewrite of the sessions system. booo...
. collecting final comments on simple binary options before launch
. Review with legal counsel next monday to sort domicile issues


Mid-term
Still deciding between bots, buy-to-cover, margin?, stop-loss..

Strike price controls are almost certain to go in place.
It looks like there's demand for weekly options, so I'll probably keep those for now.

Thanks for all your trust, folks!

A quick market review; we're growing in liquidity, slowly; after the initial interest surge, people are waiting to see how the market works, I think. Roughly 2/3 of the money in the market is on the sidelines right now, so there's more liquidity waiting there for the right circumstances.

The vast majority of options (75%) are currently out of the money, which is to say that writers have done better than bidders so far. Overall the bent looks long on the exchange, I think we're still waiting for the shorts to get their USD cycled through Gox and over to us, so we may say some better short offers out there soon.

Good luck all, and happy trading!

----** 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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June 15, 2011, 01:50:15 AM
 #179

If I had the option to get some decent leverage, I might consider being a market maker. I could very easily put more competitive prices than are currently up on almost every bid/ask. The problem is that I would have to tie up thousands of bitcoins in funds to do so, and it seems silly since most of them won't even be purchased. At the very least, I'd like to be able to place $1,000 worth of bids even though I only have $100, and if $100 worth gets picked up, my other bids would get removed. Pseudo-leverage. I can't really see any risk in that for you. As long as the system is careful about not over filling me. If everyone had this option, both on the USD side and the BTC side I think we'd see a lot more action happening.

As far as actual leverage, I don't really know how you could manage that. At current liquidity level (and any in the foreseeable future) it seems like you would be taking far too much risk. I can't see how you could force me out of a position if it starts to turn against me without much, much more liquidity.

I think the site would become a lot more popular if people saw bids and asks in a whole lot of different sections, even if the spread was wide and the prices not that great. Right now I can't really get into the position I want to even if I'm willing to pay a good bit above what I think fair.

PS - the numbers on my board are right justified, instead of centered. Makes the board look pretty crappy. I'm using firefox 4, windows 7.

PPS - Thursday at 00:00 is Thursday morning right?

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June 15, 2011, 02:44:10 AM
 #180

Woot, I just manage to sell my first option at a higher price than I picked it up for. Liquidity here we come.

By the way, they did not 'cancel out' in my 'active contracts'. This is what I see:

BOUGHT    2011-07-28    call    50.0000    1    -30.7    Exercise
WROTE    2011-06-23    call    28.5000    2    -9.2    
WROTE    2011-07-28    call    50.0000    1    -30.7  

Since the first and third are the same contract, one bought, and one wrote, shouldn't they just go away? Or do american options not work like that since I may choose to exercise it at a different time? I was trying to sell the option I had, not create a new contract, I figured it was the same thing. Now I have an extra bitcoin tied up. Sad What did I do wrong?

Which leads me to another question. Are the options auto-exercised at strike if they are in the money? I guess not... hmmm... It seems like you should really implement liquidating immediately to pay to exercise the position. Then you could auto-exercise contracts in the money for people when they strike. I don't see the risk if you just verify that the mt gox trade went through. Although the user takes risk counting on that possibility if mt gox is down.

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June 15, 2011, 03:10:56 AM
 #181

Quick bug:

If you put in a decimal in the # of contracts section (which I did on accident), the error message tell you that you are logged out, instead of informing you about the decimal.

"There was a server error, your bid / ask didn't go through. Sorry!

Probably you got logged out of your session.

Try logging in again first."

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June 15, 2011, 03:37:10 AM
 #182

Woot, I just manage to sell my first option at a higher price than I picked it up for. Liquidity here we come.

By the way, they did not 'cancel out' in my 'active contracts'. This is what I see:

BOUGHT    2011-07-28    call    50.0000    1    -30.7    Exercise
WROTE    2011-06-23    call    28.5000    2    -9.2    
WROTE    2011-07-28    call    50.0000    1    -30.7  

Since the first and third are the same contract, one bought, and one wrote, shouldn't they just go away? Or do american options not work like that since I may choose to exercise it at a different time? I was trying to sell the option I had, not create a new contract, I figured it was the same thing. Now I have an extra bitcoin tied up. Sad What did I do wrong?

Which leads me to another question. Are the options auto-exercised at strike if they are in the money? I guess not... hmmm...

I think this is still on the to do list.

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June 15, 2011, 04:22:23 AM
 #183

Woot, I just manage to sell my first option at a higher price than I picked it up for. Liquidity here we come.

By the way, they did not 'cancel out' in my 'active contracts'. This is what I see:

BOUGHT    2011-07-28    call    50.0000    1    -30.7    Exercise
WROTE    2011-06-23    call    28.5000    2    -9.2    
WROTE    2011-07-28    call    50.0000    1    -30.7  

Since the first and third are the same contract, one bought, and one wrote, shouldn't they just go away? Or do american options not work like that since I may choose to exercise it at a different time? I was trying to sell the option I had, not create a new contract, I figured it was the same thing. Now I have an extra bitcoin tied up. Sad What did I do wrong?

Which leads me to another question. Are the options auto-exercised at strike if they are in the money? I guess not... hmmm...

I think this is still on the to do list.

Which part, auto-exercising or selling the contract I already have? If I can't sell the contracts I have it make dealing in long time frame options really unpleasant. That means to exit a position I have to escrow all the resources to bid and ask, when really my resources should be completely free. This can't be right... It also increases the commission I  have to pay if this contract does end in the money... I would have to pay twice, once when the buyer exercised and once when I do... That's a whole extra dollar, and a bitcoin locked in escrow for a month, bad deal. Sad

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June 15, 2011, 04:28:57 AM
 #184

Sorry about the confusion. Selling the contract is what I meant, but I'm pretty sure auto-exercising is also on the drawing board.

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June 15, 2011, 04:31:12 AM
 #185

Feature request: Is it possible to record the option premium paid/received in the contract list? This would be helpful is seeing at a glance whether you're winning or losing on a contract.

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June 15, 2011, 08:21:39 AM
 #186

Another feature request: Display system time somewhere on the page, or time remaining until next option expiry. This would be useful as we approach the first lot of options expiring. This would save having to try to work out how long an option has left to run.

Cheers.

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June 15, 2011, 08:45:14 AM
 #187

Another feature request: Display system time somewhere on the page, or time remaining until next option expiry. This would be useful as we approach the first lot of options expiring. This would save having to try to work out how long an option has left to run.

Cheers.

Seconded. I would love a countdown so I know for sure I don't have my times wrong.

EDIT -- Nice job that was fast. It was good you got in on there, I'm an hour off for some reason. Perhaps daylight savings.

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June 15, 2011, 07:37:44 PM
 #188

Lots of updates here:

Buy to cover / sell to cover: coming.
I added color coding for ITM options, helps the board a bit, I'd say.

"Netting" your options for available funds makes sense, BUT we would also need to restrict exercising them in certain cases; I want to make sure the logic is correct.

Server time: Python and UTC is a surprising pain in the ass. We're currently reporting the correct time as far as we know it; synced up not infrequently by the server, and accurate to within a second or two from your browser through to our app server and database server.

I'm hearing the margin requests, and I agree it would bulk up the market. I'm going to sit down with a pad of paper and diagram out some logic today to see how this can be done.

Price history is going in shortly; that will be nice, I agree.

I've started putting out ads for python programmers to help; there's more than a fulltime job of stuff to do. In the interim, I'm just trying to knock off the biggest needs first, and keep working down the list.


Reminder We do not auto-exercise in-the-money options at expiration; you must do that yourself. Click on "My Contracts" and use the "Exercise" link. If you do not have the cash to exercise them all at once, you will exercise as many as you have funds for. You MUST then exchange and continue the exercising process; since Mt. Gox is not always highly liquid, this might impact the intrinsic value of your options.




----** 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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June 15, 2011, 09:46:22 PM
 #189

Just wanted to say that the interface is coming along nicely and your response time is excellent. I could probably come up with a whole list of other feature requests, but the website is not a lot more usable than even a few days ago. I was starting to try to figure out how to use API. I would still like to, if there was a good tutorial somewhere. But the need to do so is not so pressing now. Cheers.

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June 16, 2011, 12:09:52 AM
 #190

I'll contribute 1 btc bounty for a very basic functioning bot that you approve. Please include a basic BS model.

I like your API, I place all orders with it using an excel spreadsheet. I don't place orders through the browser.

Hi TTBit,

I'm still trying to learn all about how API works and am very interested in your Excel interface. Would you mind elaborating at all on how you set it up (or even PM me a copy?). I think it would be great to be able to graph payoff diagrams in Excel and be able to place orders from there as well.

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June 16, 2011, 12:22:36 AM
 #191

Okay, so expired options are evidently not released automatically upon expiry. Is this on the to do list (along with the auto-execution)? I'm ready to start writing the next round of options, but need my Bitcoin released from escrow on the expired option.

With the auto-execution of in the money options not yet enabled, I had the really sneaky idea of writing calls on in the money bids a few seconds before their expiry in the hope/assumption that the bidder would not have time to exercise them before expiry. In the end, I didn't have the required Bitcoin in my account to do so. It does highlight a danger though for the unwary if you have orders left on the market right up until expiry. Perhaps you could think about implementing a trading halt a certain time before expiry to allow people time to exercise if their order is filled at the last minute.

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June 16, 2011, 12:34:28 AM
 #192

Update

We finished out our first close date with only minor drama; I set up to manually expire the first date, then missed my own deadline, so Options Exercisers got an extra 25 minutes to exercise. I'll check the logs and see if anybody did this; then reimburse for any value delta.

Our Mt. Gox trading connection is still flaky; this has turned out to be one of the hardest parts of the system. I'm now running four virtual servers and they need to periodically claim a new token from Gox; I don't think anyone was harmed by this bug this time around, but by next week, we'll have a more resilient system in place. Mt. Gox seems to have shortened the time they'll accept your token, and combined with the DDOS protection there, we had a little bit of excitement today. Magical Tux was up past midnight in Japan helping make sure we stayed live, which he absolutely did not have to do. (THANKS!)

Your BTC / USD are all released now, so go forth and bet again on next week, I know I will be. : ).

I have a draft of a working margin / buy and sell-to-cover savvy / auto-execution system. I'm going to post it for comments; as it stands, it will not be too terribly difficult to implement. I do not know how to insure against all market depth risks, so I would like to discuss this a little bit with everyone before we move ahead. That said, I'm sold on the idea of being able to offer up to your total available BTC/USD on any contract type as a way to fill the market out. We'll want more than one person to do that, of course. : ).

Brendio, I'm pretty sure sneakiness is fundamental to the option-trader lifestyle... That said, we all appreciate your forbearance, I'm sure. : ) I do believe a trading halt would make sense; 24 hours? 12 hours? I'm open to suggestions.

Thanks all for the really fun and exciting first week. More coming, no doubt.




----** 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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June 16, 2011, 03:25:04 AM
 #193

Everything sounds really good. Can't wait to hear more.

I was also thinking about writing some calls right before the options expired. But in the end I decided that would be pretty low and potentially hurt the credibility of the system. I think until auto-exercise is up and running, the bids and asks should be pulled and hour or two before strike. I wouldn't do it if I knew I had the other person would have a full hour to exercise it.

PS I'm pretty handy with python and would be willing to help some.

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June 16, 2011, 03:43:03 AM
 #194

Damien, I would love to have you work on a sort of canonical trading bot; are you open to doing that? I will happily support you as you get your head around it. The APIs are published online (and in the bitoption API thread here), and I have a few unpublished - but available - ones that will help.

What would be great would be something on github that people could fork and add their own intelligence to.

E-mail me if you need help getting started.

I'm totally excited about that offer, thanks!

----** 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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June 16, 2011, 03:57:00 AM
 #195

Sounds good. I was thinking about doing something like that with the API anyway. I'll start tinkering. I'll let you know if I need anything.

I trade bitcoin options at https://bitoption.org/ ... Join me.
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June 16, 2011, 05:57:52 AM
 #196

This website series looks like a good tutorial on options:
http://www.investopedia.com/university/options/default.asp

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June 16, 2011, 06:29:20 AM
 #197

@nrd52, I think what you should do is bid on cheap puts. You can send me USD via mt. gox' send USD interface (to admin@bitoption.com) and you'll never have to touch BTC until you decide you want to exercise your puts.

How can I do this?  I don't see a send USD option (on the website).  I see the withdraw funds, but no place for an email address.

Don't day trade.
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June 16, 2011, 07:03:59 AM
 #198

If you click your name, you will see some options, including (I believe) one called Payment API. Just turn them all on; as far as I know, there are no security risks in doing so.

Once you do that, you'll be able to send money to an email address.

I just cleared one this week for someone; please put your account name in the notes section. 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

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June 16, 2011, 07:33:59 AM
 #199

I'm such a noob. I left the bids out through expiry. It looks like I only lost on the OOTM ones (thanks Damien and others). I was thinking for some reason I had until Thursday night, so I checked in Wednesday evening, but of course midnight Thursday had already happened (in Europe is it?)

Glad to have made the mistake on a small scale though, cheap lessons.

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June 16, 2011, 07:52:52 AM
 #200

Damien brought up expire times on bids; makes sense for this situation, along with a trading halt.

I added in a server time countdown today for just such a reason; and the server is on UTC / GMT. So we're locked in currently at London -1 (It's British Daylight Time right 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

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June 16, 2011, 10:10:52 AM
 #201

Damien brought up expire times on bids; makes sense for this situation, along with a trading halt.

I added in a server time countdown today for just such a reason; and the server is on UTC / GMT. So we're locked in currently at London -1 (It's British Daylight Time right now).


Appreciate the countdown. The site looks better every time I hit it.

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June 16, 2011, 01:15:38 PM
 #202

I received the weekly letter from bitoption - nice. I wanted to say that you need to configure your SPF record because otherwise all of your mails will go straight to spam like it did with me. I would guess that 90% of your mails this week went into spam.

Here is a tool to check the record: http://www.kitterman.com/getspf2.py

If you want to I can explain what to do.
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June 16, 2011, 02:19:37 PM
 #203

I received the weekly letter from bitoption - nice. I wanted to say that you need to configure your SPF record because otherwise all of your mails will go straight to spam like it did with me. I would guess that 90% of your mails this week went into spam.

Here is a tool to check the record: http://www.kitterman.com/getspf2.py

If you want to I can explain what to do.


My letter did not spam. Everything seemed fine.

I trade bitcoin options at https://bitoption.org/ ... Join me.
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June 16, 2011, 02:31:29 PM
 #204

Thanks for the head's up re: SPF, will do.

----** 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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June 16, 2011, 05:27:45 PM
 #205

Clicking on my username on MtGox showed my account options and then I was able to send money to admin@bitoption.org.

MtGox - should have a link that says User Account or Profile. Clicking on your user name is not standard behavior (see how this forum does it).  I'll go post that suggestion in the MtGox thread.

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June 16, 2011, 05:35:13 PM
 #206

Quote
Secondly, if you can write, I am looking for someone to volunteer to write a three or four part set of articles on how to trade forex options, with simple examples. We'd send them out to people one every few days when they sign up for the site. I think this would be a big help for many.

I can write, but I lack in-depth technical knowledge. How much detail would you need? I could certainly write enough to inform someone brand-new to options trading.

Let me know more clearly what you had in mind and I can probably take care of it.
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June 16, 2011, 09:39:29 PM
 #207

I got my first successful option that I'm bidding on (a put contract for Dec 15)!

I accidentally created it three times because it said "put in a bid" the first two times and I thought my contract hadn't gone through. 
It is possible that this an error with the Opera browser and your website.  I was using Opera 11.11.

Fortunately I was able to cancel the first two contracts.

The two contracts that I created in Opera had a strike value of $1 which is weird, because I specified a strike value of $5.

It worked fine in Firefox (4).

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June 16, 2011, 09:47:28 PM
 #208

If anyone wants to sell some medium to long term puts.  I'm interested (if the price is right).  There are currently a lot more calls.

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June 16, 2011, 09:51:45 PM
 #209

If anyone wants to sell some medium to long term puts.  I'm interested (if the price is right).  There are currently a lot more calls.

hows $10 at the end of the month sound?
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June 16, 2011, 10:00:53 PM
 #210

Medium term for me is 3 months, long term is 6-24 months.

When I submit an order, the user message that comes up could be better. It says "put in the bid" which makes me feel like I forgot to add a value in the bid field.  It should say something like: "The bid order is placed".

(See my earlier message where I was confused)

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June 17, 2011, 06:37:34 PM
 #211

It might be useful to have a feature that would pool the options by strike value. Maybe being able to click on a strike value to get a table of options at that strike value could solve this.

For instance, if I wanted to buy an option with a strike value of $20 - it doesn't make sense for me to buy one expiring July 28, if I can get one that expires at a later date at the same price or less.

This isn't a big problem now, but could become one as the number of contracts increases.

A more complex situation is that you don't want to buy a put option with a strike value of $20 for $5, if you can get one with a strike value of $19 for less than $4 with the same or longer time period.  This could be handled by subtracting the price from the strike value - and creating a column of values where the contract becomes profitable.


Also: Datatables.net has a cool javascript (jQuery) table system that lets you do A-Z column sorting, page sets, and export to CSV.  The support forum is great too.

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June 17, 2011, 07:20:59 PM
 #212

Thanks for the comments; I took a day or two off except for service requests. my brain was exploding.

mmdough, I'll e-mail you.

Other thoughts are excellent, and I'm working on them. I interviewed on programmer this week, and another is interviewing next week, so hopefully updates will come even faster soon. I'm limited in my hiring somewhat by BTC values, so if it keeps dropping, I'll probably have to cancel the programmer. (Remind me to buy some puts..)

Next post is my proposal for the margin system, 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

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June 17, 2011, 07:51:48 PM
 #213

Proposal for Margin Trading System for Bitoption

Goals: Primary goal is to increase liquidity. Secondary goal is to allow traders to speculate more. We cannot break our 'escrowed' commitment to users, so we must make sure all written contracts can be fulfilled. We want to keep the market's margin risk low to nil as well, but this is secondary to the commitment on fulfillment.

Plan: Increase "Available" USD and BTC Calculations using some netting formulas (below), and allow anything up to the Available to be bidded/asked on any given strike price / date / put or call. Implement auto-closing of bids / asks, and auto-exercise if account negative to reduce margin risk to exchange.


Proposed Netting Calculation:
-----------------------------------
Currently your available USD is calculated as: Actual USD - #/puts written * strike of puts.

This would be updated to be: Actual - #/puts written * strike + #/puts bought * strike (for puts that you have real BTC to exercise).

Available BTC is calculated as: Actual BTC - #/calls written.

It would now be: Actual BTC - #calls written + # calls bought (for calls that you have real USD to exercise).

The most valuable puts and calls would be used to calculate last number in each.

Scenario 1
So, let's say you have $100 USD and 10 BTC.

You write 5 calls for December at $100, price: $5. They get bought.

Your old and new available calcs would give you: $125 USD and 5 BTC.

Now, let's imagine two weeks later, you buy 5 calls for December / $100 and you pay $2.

The old calculation would say you have Available BTC: 5, USD: $115.

The new calculation would say you have available BTC: (10 - 5 + 1 call you can pay for) = 6, USD $115.


Scenario 2
You have $100 USD and 10 BTC.
You write 5 calls for December at $100, price: $5. They get bought.
You buy 5 calls for late July at $20 for $10.

Now you have:

USD = $75
BTC = 10 - 5 (for calls written) + 3 (as you can exercise three of your calls for $60) = 8.

Let us now imagine that you write 8 calls for early July, $25 strike. You are paid $1 per.

USD = $83.
BTC = 10 - 13 (for calls written) + 4 (you can now exercise a fourth call) = 1.

Now, imagine that the 8 calls are exercised.

USD = $283
BTC = 2 - 5 + 5 = 2

Now, you for some reason do not exercise your late July calls. After expiration, here is how things look:

USD = $283
BTC = 2 -5 = -3

You are officially underwater. As SOON as this happens, we start to force close you out of your positions to get you back up to above water in both accounts.

How we would execute a margin call
For BTC:
1) We execute any in-the-money calls you own that you can afford, one at a time until we have you above water; lowest strike to highest strike.
2) If you are still under water, we exchange on Gox USD for BTC until you are above water
3) If you are still under water, you have no more USD and no more calls. We proceed to execute any in-the-money puts you have by:
  a) loaning you the BTC
  b) taking back our loan plus a small fee
  c) sending you the remaining USD
  d) exchanging the USD on Gox
4) If you are still under water, you're broke. You have no USD, no BTC, no puts, no calls.

The USD path is analogous.

So, one question is "when could 4 happen?" I'm not sure, frankly. If the path I suggest above is sensible, and we are careful about it, it might happen only in weird exchange circumstances. I'd hate to be wrong, though, so I'm asking you for help testing out this plan in your head..

One thing is clear, we will need to do this margin check before you are allowed to withdraw USD / send BTC.





----** 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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June 17, 2011, 10:29:42 PM
 #214

Just a quick note before I duck out. The exercise option button in the GUI is not working for me, and neither is a command line. It's a put option and I have the available BTC to sell. I also tried: https://bitoption.org/exerciseContract?token=x&contractId=70&num=1, but that didn't work either. I get an internal server error.

Cheers.

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June 17, 2011, 11:17:32 PM
 #215

Just a quick note before I duck out. The exercise option button in the GUI is not working for me, and neither is a command line. It's a put option and I have the available BTC to sell. I also tried: https://bitoption.org/exerciseContract?token=x&contractId=70&num=1, but that didn't work either. I get an internal server error.

Cheers.

Having the same problem. Tried to exercise two contracts and they didn't seem to budge.
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June 18, 2011, 04:21:43 AM
 #216

http://forum.bitcoin.org/index.php?topic=18020.0 Say hello to my little friend, CSRF.
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June 18, 2011, 04:51:35 AM
 #217

Hmm, I'll check that right 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

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June 18, 2011, 05:19:44 AM
 #218

Update:

There is an attempt at a CSRF in the wild right now aimed at bitoption.org. It tries to send 20 BTC to an address starting with: 1GEwYPX6..

I reviewed our balance sheets and transaction log; nobody has been hit by this or any other CSRF to my knowledge; I manually reviewed back four days of transaction, and scanned the rest for repeated withdrawal requests to confirm.

That said, someone has clearly posted an image link, likely in these forums, which directs to sendBTC?etc.etc. This image link will not function, and has not been successful against bitoption.

The site is down right this second, I am putting in a few layers of protection against this, and will update when it's in place.

In the interim, if you would like to exercise your contracts, please email me at admin@bitoption.com FROM your account email, and I'll manually fill your requests, including withdrawals if you need.

I anticipate a few hours to get this sorted out; there will be a slight impact on API developers as well.

Sorry, this is my bad; I thought about XSS but not CSRF when I implemented the API. My hope is that the damage is limited to a little downtime for you all. More here and in the status thread as it comes!


----** 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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June 18, 2011, 09:08:03 AM
 #219

Thanks for the communication, quick and professional handling of this. Smiley
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June 18, 2011, 09:16:04 AM
 #220

I think the margin system you proposed sounds like it could work, but you must be careful that you always keep enough in escrow. I don't think you should ever have to reach step two (exchange on Gox USD for BTC until you are above water) if you are doing things right. If you add in a few extra steps in your scenario above we can get some interesting positions. If you are careful it could work, for example.

Quote
So, let's say you have $100 USD and 10 BTC.

You write 5 calls for December at $100, price: $5. They get bought.

Your old and new available calcs would give you: $125 USD and 5 BTC.

Now, let's imagine two weeks later, you buy 5 calls for December / $100 and you pay $2.

The old calculation would say you have Available BTC: 5, USD: $115.

The new calculation would say you have available BTC: (10 - 5 + 1 call you can pay for) = 6, USD $115.

What happens in this scenario if you then write 6 more calls? Would you actually put $100 in escrow for the sixth and final? It seems like you have to or you risk a bankruptcy. Would I get warned that writing that 6th call would lock up $100. I suppose this could work and give more flexibility, as long as you lock up the money when they count on exercising. Now, after that, lets say I buy a call with a strike of only $30. You would need to release $70 of the $100 you locked up since I can now exercise a cheaper contract. But lets say I want to sell the contract that exercises at $30 (selling isn't an option now, but it needs to be soon). When I put in an ask, you would have to once again lock up an extra $70, and I shouldn't be allowed to place the ask unless I have $70.

This could lead to some very confusing situation if I have very many contract and am counting on the ability to exercise them. For example, lets say I bought 5 calls at $15, 5 at $20, 5 at $25, 2 at $50, 1 at $100, and 1 at $150. I've got no bitcoins in my account but a whole lot of USD, $275. Enough to exercise all the options except the $100 and $150 one. I have no bitcoins, but if I want to write some calls, some of the USD can be put in escrow. So I write 17 calls, which puts all my money in escrow to exercise the contracts if needed. The calls are a long shot so I didn't get paid much for it, we can ignore that money.

Now someone puts in a really good bid for my $15 options, and I want to sell them (I'm assuming selling in possible) and lock in my profits. so I try to sell two of my $15 dollar options. Then the system should run the calculations, realize that I need enough USD in escrow to exercise 17 options which would require $495 if I sold two $15 options. I've only got $275 in escrow so the system asks for another $220 USD. All just to sell contracts I already own. This could be confusing, especially so if everything got even more tangled. I could see someone accidentally grid-locking his funds, unable to profit in a good situation or cut losses in a bad one. I suppose that is the danger of this leverage. Also, take into account that I could be doing this on the USD side of things as well with puts and it really starts frying the brain.

Not to mention, what I really want to do in the very first scenario is pass on the contracts I wrote to someone along with $2 (aka paying someone to take the risk of the contract I wrote... is there a term for this? selling? passing?), this way all 5 bitcoins in escrow can be freed.


EDIT

One thing I'd really like to be implemented is this:

Say I place an ask on a put. $5 for a $10 strike. Right now, $10 USD will get put into escrow. I would prefer it if only $5.05 got put into escrow, and when the contract get filled, the $4.95 ($5 - commission) that I just earned gets moved to escrow to guarantee that I can supply $10 if exercised.

Actually, going a step further, I'd like nothing to go into escrow unless the contract is made. And I'd like the ask to be removed if my balance falls below $5.05. You know what, I really need to put together a comprehensive flow chart. We could be allowed to do a lot more with zero risk to you, if we just nailed down the details of the system.

I trade bitcoin options at https://bitoption.org/ ... Join me.
I play poker at https://betco.in/ ... Join me.
Support the bitcoin economy, what do you do?
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June 18, 2011, 09:42:05 AM
 #221

UPDATE: I believe we are now resistant to CSRF attacks.

In fact, click this link to try: https://bitoption.org/sendBTC?amt=200. A common hack is to embed that url in an image link. If someone tries this, they'll be outed pretty quickly.

The site is back up with a few other requested improvements, including better feedback while waiting for exchanging, posting, withdrawing and depositing.

That was fun! Well, not really. I'm tired and chagrined, but happy that ultimate impact seems to have just been on my time.

Damien, I'll respond to your thoughts later, thanks for sending them on -- much appreciated.



----** 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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June 18, 2011, 09:46:48 PM
 #222

Second update, we got DDOS'ed today, but seem to have weathered it ok. Services are at normal.

Exercising puts is verified working.

Thanks for bearing with us!!

----** 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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June 19, 2011, 03:14:46 AM
 #223

How does this impact BitOption?

Quote
A person [which includes companies] shall not offer to, or enter into with, a person that is not an eligible contract participant, any agreement, contract, or transaction in foreign currency except pursuant to a rule or regulation of a Federal regulatory agency allowing the agreement, contract, or transaction under such terms and conditions as the Federal regulatory agency shall prescribe…
   Section 742(c) of the Dodd-Frank Act
  http://www.opencongress.org/bill/111-h4173/text?version=enr&nid=t0:enr:6175


 - http://www.zerohedge.com/article/trading-over-counter-gold-and-silver-be-illegal-beginning-july-15
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June 19, 2011, 03:28:49 AM
 #224

I seem to have plenty of USD available, but I'm being told I don't have enough to place bids. Am I misreading or is there a bug?

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June 19, 2011, 07:20:12 AM
 #225

I get the following error when attempting to register:
 
Quote
There was some sort of problem. Try again.
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June 19, 2011, 04:36:24 PM
 #226

I'm on a boat with limited internet right now, trying to get these assessed. Likely it's fallout from our new session system, installed under urgent time pressure. Sorry!


----** 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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June 19, 2011, 04:49:55 PM
 #227

Stephen, we had two places that the register form might call the backend; in one of them, we weren't using the new anti-CSRF system. It's fixed now, sorry!

FreeMoney, I just tried posting bids on puts and calls, it works for me. Did you double check that subtracted your obligations from your total USD? I will put in a better reporting interface shortly.




----** 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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June 19, 2011, 07:46:24 PM
 #228

Any chance we can get a rollback too? I made some stupid decisions to try and get some cash in order to buy low during the hackcrash.

Its ok I guess, it wasn't that bad. That's what I get for being reactionary.

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June 19, 2011, 08:06:45 PM
 #229

Damien,

As far as available BTC/USD, we will roll back in accordance with Gox, as we use their history. This is likely to be a big mess. I'm going to turn off Mt. Gox facilities on bitoption until things settle down; you will still be able to trade, but you won't be able to send / withdraw until I'm sure we're settled properly.

Personally I had a bunch of buys down at $7 or $8 on Gox; looks like I wasn't aggressive enough!

----** 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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June 20, 2011, 06:23:58 AM
 #230

I've been following this thread for a while. Nice work @bitoption on launching a functional options trading site! Question: why not accept DWOLLA for USD transfers instead of the MtGox->USD send process? Cheers.
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June 20, 2011, 02:24:27 PM
 #231

I think I have phantom obligations. Right now I have no outstanding bids or asks on anything and only own some call options. I should be able to use all of my balance to place bids, right? Will my account name help?

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June 20, 2011, 04:01:08 PM
 #232

I think I have phantom obligations. Right now I have no outstanding bids or asks on anything and only own some call options. I should be able to use all of my balance to place bids, right? Will my account name help?

Your bids count as obligations, at the bid amount. And any ask puts either a bitcion (call) or some USD (put) into escrow. By your description, you should have no obligations.

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June 20, 2011, 09:54:16 PM
 #233

FreeMoney, email me at admin@bitoption.com, and I'll make sure we're properly sorted on your account. You shouldn't be seeing this behavior. Like always, I'll post any updates and resolution here. I'm all about transparency!

Inre: Frank Dodd, we're not domiciled in the USA, but see below.

Inre: Dwolla -- The answer is that I'm still figuring out the entire business plan. Doing this business fully registered almost anywhere in the world means you need to comply with US regs when you're dealing with US citizens on US soil. It was easy to piggy back onto Mt. Gox, and I knew generally that we'd be covered by their setup, so I did it. Right now, I regret that!

My hypothesis is that there is going to be strong demand for a fully registered, functioning exchange which can work in and outside the US in high dollar volumes. Bitoption is my first foray in that direction; there are whole bunch of moving pieces there, though, including US regulatory regime.




----** 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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June 20, 2011, 10:05:20 PM
 #234

Damien,

In answer to your question about writing the 6th call; we would allow you to do that; you'd then have: 0 BTC and $115. The question is then "what next?" What I'm proposing is that any action that would take you negative would force the suggested flowchart to execute.

So, In our case, you want to go buy a $20 Put.

Now you have -1 BTC, since you don't have the money to pay for that call. At that point, we walk through the process.  In the situation I'm describing, you could get out of for less than $100 by just buying 1 BTC, and the flowchart would get there first automatically since you don't own any in the money calls (presumably).

Then you'd have (if BTC were at $10), 0 BTC net, $85 cash and some puts and calls.

It is head-spinning on the numbers. I agree a flow chart would make a lot of sense. We have a sort of state machine going here in describing it.

I think I want to build up from the bottom; the first thing that needs to be done is an auto-exercise, then a 'multi-stage' execute, that is, execute, exchange, execute again.

Then I can add closing out positions and the 'net requirements' calculation.

Once those are done, we can open the leverage up a little, say to asks on a certain strike/date.

We have a little time since Gox is down, but I'm eager to get the next level going for you guys.





----** 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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June 22, 2011, 03:02:56 AM
 #235

So I logged on several times and I can't access my balance, coins or my contracts. I get an "internal server error" or a blank pop-up box.  Sent PM twice to bitoption with no response.


insert coin here:
1Ctd7Na8qE7btyueEshAJF5C7ZqFWH11Wc

Open an exchange account at CampBX: options, lowest commissions, and best security
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June 22, 2011, 03:28:25 AM
 #236

Email sent.

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June 22, 2011, 04:10:10 AM
 #237

Billy Joe is settled; just had to logout and back in.

FreeMoney seems to be settled from my side; just waiting to hear back from him/her.

----** 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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June 22, 2011, 04:46:43 AM
 #238

I wanted to make a few notes / updates here for people as it's been a bit of an unsettling week.

We filed the exchange's Mt. Gox claim today; we should have no problem getting our account reopened; the password was plenty secure, and the account was used frequently and created after the salted passwords were added.

I would like to make something clear; as of right now, I have enough BTC (stored outside of Mt. Gox) to cover all losses the exchange would incur if Mt. Gox died and delivered 0 to everyone. It would take me pretty close to zero, but I could do it.

It's my hope that I won't have to do that, but I appreciate the trust you all have put in me and the exchange, and I definitely sleep well at night knowing that we can cover our obligations.

Long term, I am considering how to best store the BTC and USD for the exchange. As it is, I had considered it a safer and more secure solution to use Mt. Gox directly than to deal with Dwolla, wallet backups and etc. This might have been a bad decision, or it might be that Gox is still better placed to deal with this right now, while I work on features. I think we'll know more in the next week or so.

As might be expected, trading has slowed on bitoption this week; it's been helpful for me as we were moving at a breakneck pace for a bit there.

Upcoming Changes
I am 90% settled (meaning: advocate hard, now, if you disagree) on the following structural changes to the market:

As of June 30 or so, all new options written will be European style. We will keep the weekly options close dates. European and American style options will coexist in the system out through roughly Dec-30, as some have been written / bought out in that timeframe; you'll just see the 'exercise' link next to the ones you can exercise.

We will halt trading 24 hours before a period close, and allow exercising of options during that 24 hour period UNTIL we implement auto-exercise, at which point we will probably turn off exercising altogether.

We will soon allow a very specific netting: bought and sold contracts of the same type and positive strike delta for the same date. This is easy to implement and low risk to the exchange, plus it will free up some funds for you all.

This netting system means you'll be able to buy and sell contracts along the way, creating the sort of value that most option traders are looking for. It also means you can dig out your Black-Scholes calculators, something I think will be a big help for proper pricing.

It is my goal to also implement a more effective margin system, along the lines Damien and I have been discussing. When it rolls out, we will likely first lock any account that goes 'negative' based on some risk scoring, and it will need to be manually reinstated; this will give us the ability to make sure we're getting things right, something everybody wants, no doubt.

Because of this locking, I will probably make margining 'opt-in' meaning you can trade on hard assets only, and avoid the heuristic locking.

Finally, I built the system to be pretty careful about money (for instance, the first thing I wrote was the exchange's balance sheet functionality), but I am convinced that a full, replayable log is the right thing to have given what happened with Mt. Gox. I'm still getting my head around the right way to do this; suggestions are welcome. My current plan would be to dump out a log of each request to something like a co-located MongoDB box. This of course