This is exclusively an options platform, so I'm gonna quote one of my favorite references for 'trading options.' This comes from Jack Schwager's Market Wizards interview with Jim Rogers, who moved to Singapore several years ago I believe:
" Q: Were you short stocks or long puts?
[Rogers] I was short stocks and short calls. I don't buy options. Buying options is another fast way to the poorhouse. Someone did a study for the SEC and discovered that 90 percent of all options expire as losses. Well, I figured out that if 90 percent of all long option positions lose money, that meant that 90 percent of all short option positions make money. If I want to use options to be bearish, I sell calls."
Now, I know there are no absolutes in investing. Still, barring some exceptional circumstance you will generally find me the seller.
What I like about selling 796 Exchange futures right now is that they are priced at a ~2% premium to spot, so I get the directional exposure, and the time decay of an option-like premium. Actually, given the margin regimes, the 796 Exchange futures offer GREATER leverage than short options position on Coinut.
So Andy - one important point here is that you are ALREADY directly competing with the futures exchanges. As traders we compare risk/reward offered by various instruments across exchanges, and you are not winning that hands down yet. That is why I am suggesting this ideal configuration:
A. Robust third party index
B. Futures contract on that index.
C. Options on that index, or options-on-futures. (They can be index options or futures-options.)
D. Portfolio margining.
I like dreaming ... lol.
Topic: [ANN] Coinut.com - The only Bitcoin Options Exchange [beta] - page 11. (Read 34192 times)
Vanilla options, I've started playing with them today, and I have this question:
Does the margin formula provide for a maximum maintenance margin of 0.004 btc? Or does the (-out of the money portion) turn positive when the option is in-the-money?
I'm short some out-of-the-money contracts, and wondering how high my maintenance margin could go if the market moves against me.
Currently my margin requirement is about 0.0033 per contract. Can that rise to more than .004 under normal circumstances?
Does the margin formula provide for a maximum maintenance margin of 0.004 btc? Or does the (-out of the money portion) turn positive when the option is in-the-money?
I'm short some out-of-the-money contracts, and wondering how high my maintenance margin could go if the market moves against me.
Currently my margin requirement is about 0.0033 per contract. Can that rise to more than .004 under normal circumstances?
CoinDesk has a pretty nice index, it seems to take into account many of the major exchanges, however it is only calculated every minute, I will post here if I find something better
if you tell your users that you use it when it is up, you must use it when it is up. and you must not use it when the servers are down. otherwise you are committing fraud. it does not matter if their servers are intermittently up and down, you must keep update your index in realtime, which you are not doing.
Nobody is manually controlling it to make it up or down. It's the program itself that detects BTC-e.com is up or not. There is no manipulation here. You may have bought some puts so you complain here. But what if you have bought some calls? Everyone is experiencing the same problem. But this is much better than using only one exchange, which then becomes a single point FAILURE.
It doesn't matter if anyone is intentionally manipulating it or not. If you tell your users you will calculate the index one way, and then you actually calculate it another way, it is fraud, regardless of intent. I am glad to see btc-e has been removed, as this will help fix the problem, but Indamuck is right. No serious market maker will come close to this unless there is a verifiable third party index being used. Because I am calculating the index much closer to real time, using sockets where available and polling every .2 seconds, and your index is usually very delayed. This kind of misrepresentation of the actual index will prevent any legitimate institutional investing from occurring on your site
Thank you and Indamuck, we will definitely find a way for this problem and make the index unbeatable.
if you tell your users that you use it when it is up, you must use it when it is up. and you must not use it when the servers are down. otherwise you are committing fraud. it does not matter if their servers are intermittently up and down, you must keep update your index in realtime, which you are not doing.
Nobody is manually controlling it to make it up or down. It's the program itself that detects BTC-e.com is up or not. There is no manipulation here. You may have bought some puts so you complain here. But what if you have bought some calls? Everyone is experiencing the same problem. But this is much better than using only one exchange, which then becomes a single point FAILURE.
It doesn't matter if anyone is intentionally manipulating it or not. If you tell your users you will calculate the index one way, and then you actually calculate it another way, it is fraud, regardless of intent. I am glad to see btc-e has been removed, as this will help fix the problem, but Indamuck is right. No serious market maker will come close to this unless there is a verifiable third party index being used. Because I am calculating the index much closer to real time, using sockets where available and polling every .2 seconds, and your index is usually very delayed. This kind of misrepresentation of the actual index will prevent any legitimate institutional investing from occurring on your site
Nobody is manually controlling it to make it up or down. It's the program itself that detects BTC-e.com is up or not. There is no manipulation here. You may have bought some puts so you complain here. But what if you have bought some calls? Everyone is experiencing the same problem. But this is much better than using only one exchange, which then becomes a single point FAILURE.
The ideal solution, and the only real long-term solution, is to use a robust, respected third party index. Yes, you will likely have to pay some licensing fee, but it will raise the legitimacy of your product and help you grow volume. I work with some professional hedge fund managers ... and they wouldn't take this 'exchange' seriously until you've made these types of upgrades. You might look to add someone to your team who has direct experience launching & managing new products on a derivatives exchange. I know Singapore Exchange has been struggling to launch a number of contracts over the years ... some have gained traction while most have floundered. Still, the experience people gain developing and launching those products might be valuable to you.
Ideas are cheap, I know ... lol.
Just removed BTC-e.com. They are ridiculous today.
Nobody is manually controlling it to make it up or down. It's the program itself that detects BTC-e.com is up or not. There is no manipulation here. You may have bought some puts so you complain here. But what if you have bought some calls? Everyone is experiencing the same problem. But this is much better than using only one exchange, which then becomes a single point FAILURE.
The ideal solution, and the only real long-term solution, is to use a robust, respected third party index. Yes, you will likely have to pay some licensing fee, but it will raise the legitimacy of your product and help you grow volume. I work with some professional hedge fund managers ... and they wouldn't take this 'exchange' seriously until you've made these types of upgrades. You might look to add someone to your team who has direct experience launching & managing new products on a derivatives exchange. I know Singapore Exchange has been struggling to launch a number of contracts over the years ... some have gained traction while most have floundered. Still, the experience people gain developing and launching those products might be valuable to you.
Ideas are cheap, I know ... lol.
if you tell your users that you use it when it is up, you must use it when it is up. and you must not use it when the servers are down. otherwise you are committing fraud. it does not matter if their servers are intermittently up and down, you must keep update your index in realtime, which you are not doing.
Nobody is manually controlling it to make it up or down. It's the program itself that detects BTC-e.com is up or not. There is no manipulation here. You may have bought some puts so you complain here. But what if you have bought some calls? Everyone is experiencing the same problem. But this is much better than using only one exchange, which then becomes a single point FAILURE.
if you tell your users that you use btc-e when it is up, you must use it when it is up. and you must not use it when the servers are down. otherwise you are committing fraud. it does not matter if their servers are intermittently up and down, you must keep update your index in realtime, which you are not doing. for example, btc-e is down right now, but you are factoring it into your index, which is fraud
they are currently not pulling from btc-e, even though it is up, that is fraud. affecting the price index by about 2 dollars
Don't a lot of resources that average Bitcoin exchange rates exclude BTC-E? The site has a pretty poor reputation, and isn't the most reliable site either. Honestly, I don't see the problem.
Yeah, btc-e.com is quite unreliable. Its API service was down during the last few minutes because their DNS service got some problem. We may consider removing btc-e.com in the future.
they are currently not pulling from btc-e, even though it is up, that is fraud. affecting the price index by about 2 dollars
Don't a lot of resources that average Bitcoin exchange rates exclude BTC-E? The site has a pretty poor reputation, and isn't the most reliable site either. Honestly, I don't see the problem.
they are currently not pulling from btc-e, even though it is up, that is fraud. affecting the price index by about 2 dollars
The spread for 30-minute binary options has been reduced significantly. Enjoy trading!
Regarding spreads it really depends on order flow. There's really a lot of risk with binary option makers because they don't know which direction it's going to go and it's hard when they're trading with people who are really good at predicting direction.
Basically the prices reflect the uncertainty in the market maker, and it's really uncertain.
But, if there's enough orderflow, enough people choosing to go short and long in a short time frame. I would think that the market maker would be able to lower their spreads. They would price it so that they'd want to be closer to a neutral hedge. If everyone is trying to buy long calls, they'd make those more expensive, and they'd make puts cheaper to buy.
Basically the prices reflect the uncertainty in the market maker, and it's really uncertain.
But, if there's enough orderflow, enough people choosing to go short and long in a short time frame. I would think that the market maker would be able to lower their spreads. They would price it so that they'd want to be closer to a neutral hedge. If everyone is trying to buy long calls, they'd make those more expensive, and they'd make puts cheaper to buy.
You seem pretty good at it. Why not become a market maker of us?
Regarding spreads it really depends on order flow. There's really a lot of risk with binary option makers because they don't know which direction it's going to go and it's hard when they're trading with people who are really good at predicting direction.
Basically the prices reflect the uncertainty in the market maker, and it's really uncertain.
But, if there's enough orderflow, enough people choosing to go short and long in a short time frame. I would think that the market maker would be able to lower their spreads. They would price it so that they'd want to be closer to a neutral hedge. If everyone is trying to buy long calls, they'd make those more expensive, and they'd make puts cheaper to buy.
Basically the prices reflect the uncertainty in the market maker, and it's really uncertain.
But, if there's enough orderflow, enough people choosing to go short and long in a short time frame. I would think that the market maker would be able to lower their spreads. They would price it so that they'd want to be closer to a neutral hedge. If everyone is trying to buy long calls, they'd make those more expensive, and they'd make puts cheaper to buy.
Andy,
Take a look at short positions in btc at Bitfinex. If you have an account there you can access this statistic real time. I don't have my account open at the moment, but there are typically ~20,000 btc shorted there, most of it on a long-term basis. Fair to assume many of these are miners hedging their future production - large customers who maintain long-term positions. (Do Chinese miners also hedge on some of the Chinese exchanges? I'm not sure ...)
You should be able to offer a better hedging vehicle, i.e. call option alternative that is cheaper (better value) than borrowing btc and shorting at bitfinex. At bitfinex miners must deposit US$ and then pay to borrow btc in order to short. Now on your platform they would need to deposit and hold additional btc, a drawback, but by hedging via short calls, these minors would be saving money I'm thinking. Over time they would benefit from premium decay. Of course the longer-horizon contracts you offer, the better. And because of their volume sales, I would expect they would drive prices down to attractive levels, attracting positional traders like myself. THAT is your golden ticket: customers trading with customers, with market makers relegated to filling in the gaps.
You should run a hypothetical miner's portfolio and compare hedging cost on Coinut vs. Bitfinex. If you can make a compelling case for offering a better hedging vehicle for miner's prospective income streams, and you advertise THAT, you can steal Bitfinex' business here.
Anyway, ideas are a dime-a-dozen I know. Execution is always toughest ... lol.
Take a look at short positions in btc at Bitfinex. If you have an account there you can access this statistic real time. I don't have my account open at the moment, but there are typically ~20,000 btc shorted there, most of it on a long-term basis. Fair to assume many of these are miners hedging their future production - large customers who maintain long-term positions. (Do Chinese miners also hedge on some of the Chinese exchanges? I'm not sure ...)
You should be able to offer a better hedging vehicle, i.e. call option alternative that is cheaper (better value) than borrowing btc and shorting at bitfinex. At bitfinex miners must deposit US$ and then pay to borrow btc in order to short. Now on your platform they would need to deposit and hold additional btc, a drawback, but by hedging via short calls, these minors would be saving money I'm thinking. Over time they would benefit from premium decay. Of course the longer-horizon contracts you offer, the better. And because of their volume sales, I would expect they would drive prices down to attractive levels, attracting positional traders like myself. THAT is your golden ticket: customers trading with customers, with market makers relegated to filling in the gaps.
You should run a hypothetical miner's portfolio and compare hedging cost on Coinut vs. Bitfinex. If you can make a compelling case for offering a better hedging vehicle for miner's prospective income streams, and you advertise THAT, you can steal Bitfinex' business here.
Anyway, ideas are a dime-a-dozen I know. Execution is always toughest ... lol.
Wide spreads signify markets that have low liquidity. Just because another site has wider spreads doesn't mean wide spreads are okay. Would be nice to see tighter spreads. Very little volume for the 30 minute binaries.
It's extremely hard to market make binary options. That's why there's big spreads. Maybe if it's extremely liquid it might be possible. Anyways I don't find the spread a problem. It's not that hard to make money on them.
Chris, you are absolutely right. It is extremely hard to make the binary options market especially for Bitcoin. That's the only reason for the spread. Market makers also want to gain more volume and make money. They just need to invest a lot of time to polish their pricing models to offer tighter spread.
Wide spreads signify markets that have low liquidity. Just because another site has wider spreads doesn't mean wide spreads are okay. Would be nice to see tighter spreads. Very little volume for the 30 minute binaries.
It's extremely hard to market make binary options. That's why there's big spreads. Maybe if it's extremely liquid it might be possible. Anyways I don't find the spread a problem. It's not that hard to make money on them.
Wide spreads signify markets that have low liquidity. Just because another site has wider spreads doesn't mean wide spreads are okay. Would be nice to see tighter spreads. Very little volume for the 30 minute binaries.
spreads on the binary options are just way too large, just waiting for alt-options to open up. If you watch the order books for the sites, you can actively see the manipulation of the price index at the expiration of the 30 minute windows. Your index calculation is also well off from real time, sometimes many seconds off. Worst I have seen is over a minute delay between Bitstamp's order book, and the Coinut price index page reflecting this change, sometimes it does not reflect the change at all. Fraudulent at best.
Alt-options is not implementing Binary options.
Anyways there's nothing wrong with binary option spread. When you talk about the spread. Marketmakers don't need to keep a tight spread on binary options. If you look at a site like btcoracle there spreads are a lot wider.
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