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Topic: If Bitcoin Wants Serious Investment, It NEEDS Options Trading (Read 1749 times)

sr. member
Activity: 448
Merit: 250
It's Money 2.0| It’s gold for nerds | It's Bitcoin
I can see a good financial services market in bit coin but we don't have to use to imitate all of the bad ideas in fiat currency. If you want to hold a position in bit coin buy some bit coin.

There are many legitimate uses for option contracts. Some examples include selling calls against stock in your portfolio to receive additional income, buying insurance against a decline in the value of your investment, buying a certain asset at a discount
legendary
Activity: 889
Merit: 1013
I think bitcoin will really benefit from futures contracts, rather than options specifically. If people could agree what they would buy and sell bitcoins for 1,2, 3 years from now businesses could realistically use them as money. Also I think this would allow a much smoother move to much higher bitcoins prices (e.g. $100,000)  which are need to fill the gap bitcoin is ready to fill in the global economy, without the massive day trading volatility route we are currently taking to those prices. If the exchanges offering the contracts were fully transparent, i.e. allowing the bitcoin address to be visible showing the number of coins going in and out of the exchange (and set to go in and out of the exchange in the future) it would show that there was no naked short selling. I'm not sure, but I think the blockchain could be used to build the actual futures contacts as it allows contracts as well as just being an asset ledger. Maybe someone with more technical knowledge could comment?
member
Activity: 109
Merit: 10
There is already enough speculation with Bitcoin. We don't Need another tool for more speculators, even if you call them Investors instead of speculators.
You want to invest in Bitcoin? Invest the little time that is needed to implement a solution for your customers to pay with Bitcoin. That's all Bitcoin really need.
The goal of Bitcoins is to become a currency, not to stay a commodity.
That is not my area of expertise. I highly encourage those that are capable to help expand bitcoin's acceptance as a currency. However back in the current reality it is the investors that are driving the value. If bitcoin's value was still around $25 there would never have been the interest (good and bad) that has propelled bitcoin forward toward becoming a currency. Admittedly there is a potentially valid point of view that it has become too noticed too soon. But I'll leave that discussion for someone else.

I plan to do my part as an investor (not the same as a hoarder) and hope others take advantage of that raised profile to further position it as a currency. When it is advantageous beyond just conceptually to use it as a currency, I will do so.

But we all have our parts to play.
legendary
Activity: 3892
Merit: 4331
i am totally fine with only "not serious" investors being involved. MORE for me!  Wink
legendary
Activity: 826
Merit: 1002
amarha
There is already enough speculation with Bitcoin. We don't Need another tool for more speculators, even if you call them Investors instead of speculators.
You want to invest in Bitcoin? Invest the little time that is needed to implement a solution for your customers to pay with Bitcoin. That's all Bitcoin really need.
The goal of Bitcoins is to become a currency, not to stay a commodity.

QFT. Speculation means volatility. What we need is a slow but steady rise in price instead of the roller coaster ride.
Options trading is sort of a betting market, it has very minimal, if at all effect on actual market.

Yeah, aren't most option trades done on a sort of peer to peer basis with the broker facilitating it?

I'd like to be able to have the option to buy options, you can hedge your risk if you feel that you need to.
full member
Activity: 144
Merit: 100
There is already enough speculation with Bitcoin. We don't Need another tool for more speculators, even if you call them Investors instead of speculators.
You want to invest in Bitcoin? Invest the little time that is needed to implement a solution for your customers to pay with Bitcoin. That's all Bitcoin really need.
The goal of Bitcoins is to become a currency, not to stay a commodity.

QFT. Speculation means volatility. What we need is a slow but steady rise in price instead of the roller coaster ride.
Options trading is sort of a betting market, it has very minimal, if at all effect on actual market.
sr. member
Activity: 406
Merit: 250
There is already enough speculation with Bitcoin. We don't Need another tool for more speculators, even if you call them Investors instead of speculators.
You want to invest in Bitcoin? Invest the little time that is needed to implement a solution for your customers to pay with Bitcoin. That's all Bitcoin really need.
The goal of Bitcoins is to become a currency, not to stay a commodity.

QFT. Speculation means volatility. What we need is a slow but steady rise in price instead of the roller coaster ride.
legendary
Activity: 1596
Merit: 1000
Wait a sec, why are people saying that derivatives only increase volatility? While you could create derivatives amplify your risk I think you can also create ones that lower volatility as well.

We are not talking about the normal small-time traders here. We are talking about the big banker-sponsored Wall Street -based traders, who don't hesitate to manipulate the markets, in order to make a profit.
I do not think it is easy to manipulate the markets for Wall Street traders after the BTC option is offered.  BTC will be recognized as global currency, the trading volume will be much higher than today. Even the Wall Street traders will be imposible to control the price, same as the price of gold and dollar.     
legendary
Activity: 1596
Merit: 1000
Once BTC options is available, cryptocurrency exchanges have one more source of getting profits. It is good for BTC to get accepted,  bought and spent. Companies who offer BTC payment option for customers could hedge risks with BTC option or future by keeping BTC paid by customers rather than converting to fiat once the BTC payment is made.
full member
Activity: 144
Merit: 100
Why not making a precedent and design the options trading as part of the regular trading platform? Going to established brokers is a very hard sell in my opinion. It is pretty much the same as trying to get banks working with Bitcoin.
hero member
Activity: 714
Merit: 500
There is already enough speculation with Bitcoin. We don't Need another tool for more speculators, even if you call them Investors instead of speculators.
You want to invest in Bitcoin? Invest the little time that is needed to implement a solution for your customers to pay with Bitcoin. That's all Bitcoin really need.
The goal of Bitcoins is to become a currency, not to stay a commodity.
member
Activity: 109
Merit: 10
I can see a good financial services market in bit coin but we don't have to use to imitate all of the bad ideas in fiat currency. If you want to hold a position in bit coin buy some bit coin.
If you are in the group which treats bitcoin as a commodity, as an investment vehicle, which I think is by far the largest group for now until more of the marketplace begins to accept it, options become a great avenue for more people to invest.

All an option is is the option to buy or sell at a set price within a set time frame. It's a bet placed against someone else willing to make the opposite bet. But the effect it has is being able to limit your risk. So if a person is staying away from bitcoin because he has been told it could be worth nothing tomorrow, this is a way for him to invest without that concern. Once he has done this a few times he might have enough confidence in bitcoin to buy some for real.

Options have nothing to do with derivatives. Options are a wonderful investment mechanism and I think would be very good for bitcoin being accepted by a wider range of investors.
newbie
Activity: 44
Merit: 0
The only reason I could see options on bitcoin becoming necessary would be if businesses begin paying for or selling products/services priced in bitcoins.  They would want a means to hedge.  With the current volatility of the bitcoin, we are a long way from pricing with it.
legendary
Activity: 3752
Merit: 1217
Wait a sec, why are people saying that derivatives only increase volatility? While you could create derivatives amplify your risk I think you can also create ones that lower volatility as well.

We are not talking about the normal small-time traders here. We are talking about the big banker-sponsored Wall Street -based traders, who don't hesitate to manipulate the markets, in order to make a profit.
legendary
Activity: 826
Merit: 1002
amarha
Wait a sec, why are people saying that derivatives only increase volatility? While you could create derivatives amplify your risk I think you can also create ones that lower volatility as well.

Options were created for farmers so that they could lower their own risk. They could sell future crops at a fixed price and guarentee that their family would have enough money to cover their farm.
legendary
Activity: 3752
Merit: 1217
QFT. We have to get away from being a speculative market for mass adoption. A more stable price also means business can keep bit coin in bit coin instead of instantly converting it back to fiat and lowering prices.

Definitely. The extreme volatility is currently being considered as one of the major drawbacks of Bitcoin right now. And I am afraid that speculative trading might worsen the problem.
sr. member
Activity: 406
Merit: 250
Why would we want serious investment?

Bitcoin is a currency...for spending.

Remember?

QFT. We have to get away from being a speculative market for mass adoption. A more stable price also means business can keep bit coin in bit coin instead of instantly converting it back to fiat and lowering prices.
legendary
Activity: 3598
Merit: 2386
Viva Ut Vivas
Why would we want serious investment?

Bitcoin is a currency...for spending.

Remember?
member
Activity: 104
Merit: 10
Quote
There are many people out there who may have longterm bullish views on bitcoin, but aren't ready to take on short term volatility. If serious investors are given the chance to partake in bitcoin in a designated time period, they're more likely to do so.

An option contract would create even more volatility then the price of Bitcoin. Any derivative will have a greater amount of volatility then the underlying asset.

The huge amount of volatility in Bitcoin would also likely make Bitcoin options prohibitively expensive. When you buy for example a Call option, someone will need to take the opposite bet of you and if it is good possibility that the price of Bitcoin will rise 20% in one day (this is not uncommon) then the person on the other side of the bet will need to be compensated.

In general options contracts being available for an investment is the result of a large amount of liquidity and investment in the underlying asset. Options contracts generally do not cause investments in the underlying asset.   
sr. member
Activity: 364
Merit: 250
I'm aware that not everyone is cognizant with what options trading is, so here's a simple definition from the SEC: "Options are contracts giving the purchaser the right to buy or sell a security, such as stocks, at a fixed price within a specific period of time. Stock options are traded on a number of exchanges."

Everything trades in options nowadays; gold, silver, wood, copper, cows, coal, cotton, stocks, YOU name it and it has options. Does bitcoin have options? Unfortunately the answer is no. There are many people out there who may have longterm bullish views on bitcoin, but aren't ready to take on short term volatility. If serious investors are given the chance to partake in bitcoin in a designated time period, they're more likely to do so.

So what can we do? Petition the CBOE (Worlds largest option exchange) to allow for options w/bitcoin. I know many people here aren't aware of how options work, but you must trust me on this on. It's absolutely HUGE. CBOE has nothing to lose from this, they'll just have another avenue of potential revenue.

Call their investors relations Mon-Fri and advise that they would be better off if they took on bitcoin.

Inside the US (Mon-Friday 9am-7pm) - (866) 301-8223
Outside the US(Mon-Friday) - (201) 680-6578

Lets go to Pluto people, lets get options trading for bitcoin!

We need altcoin options!

Shorting Auroracoin at .1 BTC .... Cheesy:D:D:D
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