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Author Topic: Bitoption.org -- ESCROWED LIVE Bitcoin Options Trading  (Read 35030 times)
Sukrim
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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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bitoption
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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.


----** 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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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.

----** 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

-----------------------------------------------------------
jtimon
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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)
Hal
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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.

bitoption
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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!

----** 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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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

----** 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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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.

----** 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

-----------------------------------------------------------
clickbangdone
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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.



bitoption
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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?

----** 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

-----------------------------------------------------------
clickbangdone
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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.
bitoption
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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. : )

----** 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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Strength in numbers


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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.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
bitoption
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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.


----** 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

-----------------------------------------------------------
nrd525
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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.
bitoption
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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. : )

----** 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

-----------------------------------------------------------
nrd525
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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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bitoption
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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!

----** 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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