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.
http://i.imgur.com/mwVPx.png
Topic: Bitoption.org -- ESCROWED LIVE Bitcoin Options Trading - page 9. (Read 36582 times)
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.
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.
Please post example trade with call just like put
example above ? I appreciate your help )
example above ? I appreciate your help )
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.)
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.)
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!
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!
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
Probably want to update that
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.
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.
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. : )
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. : )
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).
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).
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.
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.
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.
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. : )
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. : )
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?
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.
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?
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?
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.
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.
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.
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.
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
http://forum.bitcoin.org/index.php?topic=12495.0
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!
Let me know if it's a priority for you, though!
Do you have to convert your btc to USD to write a call?
Yup.
Do you have to convert your btc to USD to write a call?
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