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Author Topic: Bitoption.org -- ESCROWED LIVE Bitcoin Options Trading  (Read 35121 times)
dacoinminster
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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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bitoption
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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

-----------------------------------------------------------
dacoinminster
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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.

Longmarch
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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.

bitoption
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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

-----------------------------------------------------------
dacoinminster
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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

bitoption
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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

-----------------------------------------------------------
Grant
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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


bitoption
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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

-----------------------------------------------------------
AndyRossy
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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?
jtimon
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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)
bitoption
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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

-----------------------------------------------------------
jtimon
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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)
bitoption
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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

-----------------------------------------------------------
jerfelix
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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!
Grant
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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.

bitoption
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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!

----** 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 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.


----** 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

-----------------------------------------------------------
jerfelix
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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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