Author

Topic: BitcoinOPX expanded trading to Gold, Euros, Stocks and more [Feedback Requested] (Read 760 times)

member
Activity: 112
Merit: 10
Without the option of delivery of the underlying asset this to me is more or less just gambling and I'd really hope you'd want to include the option of delivery and contribute to the future convertibility making bitcoins a better money in the process.

It's interesting you should say that because I saw an article the other day on Yahoo! Finance titled "How to know whether you're investing or gambling".  Cheesy

With the stock market nowadays I would call it more of a gamble.

More direct to your concern, though, contracts for difference DO allow delivery of the underlying assets because you are paid the amount required to purchase them. That's the point.  

Take ounces of gold for example. Say you have none and want to purchase 5 ounces. But you're about to go on vacation and that will tie up your money. You think to yourself that's too bad because gold prices are about to rise for sure! Say you are in Susan's position in the example above. You would certainly take Bob's offer to BUY the 5 ounces of the contract. This way if gold prices rise as you think they will you will be paid enough to actually buy the 5 ounces as if the price had not moved when you return from vacation.

This works with any underlying asset, whether bitcoins, stocks, or oil. And it's no different than buying or selling stocks or whatever directly timed for when you think the price will rise or fall.

There is no reason for us to buy a warehouse attempting to try to store and deliver the underlying assets which traders might trade.
legendary
Activity: 1078
Merit: 1003
Without the option of delivery of the underlying asset this to me is more or less just gambling and I'd really hope you'd want to include the option of delivery and contribute to the future convertibility making bitcoins a better money in the process.
member
Activity: 112
Merit: 10
Hey everyone,

We are working on expanding trading beyond bitcoins. We currently use a contract for difference model to settle option, and are looking to add direct contracts for difference too. The advantage of CFD is traders don't need to own the underlying asset which makes it possible to trade basically anything with a market price.

We're thinking to limit the items we start with to Gold, Euros, and tech stocks like Google, Apple, Amazon, and Yahoo. However, it's possible to include commodities such as oil, wheat, cocoa, sugar etc.  Grin

Which items would you like to see?

Contract for Difference Example

Gold rises $6.00 to $1594.70 and Bob thinks it's now headed lower. He creates a contract for difference as a Seller for 5 units of Gold at a price of $1590.00.

Bob's offer in the Order Book = Sell 5 Gold oz. @ $1590.00.

Susan thinks gold is headed higher so she accepts Bob's offer.

Susan's offer in the Order Book = Buy 5 Gold oz. @ $1590.00.

The contract for difference stipulates a Seller will pay the Buyer the difference between the contract price and market price at contract time (contracts mature every Friday at 6 pm). If the difference is negative the Buyer pays the Seller.

At maturity the market price of gold is $1600. Bob was wrong on the price direction and would owe Susan ($1600 - $1590) x 5 = $50.

If the market price at maturity had been $1585 (a negative difference) Susan would owe Bob ($1590 - $1585) x 5 = $25.

Jump to: