Topic: Miners, You Should Be Earning 7% Fixed Income With Options (Read 10908 times)

MPEx:

 - http://en.bitcoin.it/wiki/MPEx

Never really took off......which is a shame.  I would LOVE to be able to trade calls and puts on BTC. 

bitcoinopx site is down, or ... gone now?

Update: thanks to user feedback we've now switched to American style ability to exercise options anytime before maturity!

If the market price is above (or below for puts) the strike price you can exercise the option immediately and cash out your payment.

We've also added a handy view all link on the Trade page to see all active options on the same page.

Hey everyone,

I'm happy to announce our exciting new change: hourly options.

https://bitcoinopx.com

Our lack of volume may have been due to our options not being a good fit with the needs of the community. People deposit, withdraw, and trade bitcoins on exchanges 24/7, so it makes sense hourly scheduled options might be a better fit

We've added trade examples to our options overview page, including how miners as coin sellers can benefit.

Details are on our updated How it Works page.

We hope you'll try out our new set up, and let us know what you think.

Happy trading!

Regarding interest in our service, I think there is good interest. During our beta soft launch we had lots of testers and helpful feedback. Since going live we have had sign ups, but not many have taken trading action. I think people are still getting up to speed with how they might use options for their own situation. This is a small community and people comfortable with options will be smaller.

For placing an order from the Trade screen please be sure the quantity and limit fields have a value entered. If you would like to email a screenshot of your entries before clicking 'preview order' to [email protected] I can give more information.

OK, I actually found some bids.....I am trying to hit them, and I get this error:

Preview order There was a field error. Please click here and verify field values.

Why do I see absolutely NO bids on options?

Am I doing something wrong, or is there simply zero interest in your service? 

We're working on adding BTC <-> USD currency exchange (via MoneyPaks) which should be ready soon. I think that will help with traffic, which may spill over to trade activity too. People are still getting up to speed with options and how they can be applied to their own situation.

The overall Bitcoin community continues to grow too, so with luck things will pick up.

Apologies, Obsi. It's approved. We don't yet have much withdrawal activity.

We salt and hash passwords with bcrypt. We also require the password be at least 8 characters, numbers, letters upper and lowercase, and symbols. You say that's not secure at all?

This also means an attacker has gained access to our database to try a brute force attack.

I'm mindful that computer hardware is advancing, probably helped by Bitcoin mining demand. I'd be curious to know if this community believes 8 characters is no longer adequate.

I'll take that challenge.  I'll give you a bcrypt hashed (workload 20) of a random 7 char password (all keyboard keys) If you can't return the password in "minutes" (lets say 60 minutes) you lose.  If you can you win. How much do you want to wager?  I agree with the larger point that OP security policies are .... lacking but your belief you can crack any 7 char hash in minutes is probably unfounded.  A high end GPU will get less than 1kh trying to brute force bcrypt (workload 20).
  

I noticed that! Eight's not secure at all and be cracked with some gpus?

Thanks, TTBit!

Let me go over what you are proposing:

Right now the price is about $6.80, and you are willing to pay $15.05 for a July 27 CALL 100 with strike price of $7.00. (this is the right to buy 100 bitcoins at $7.00 on July 27th)

This is offering someone interested in selling about 5% over the current price. ($15.05 divided by 100 = $0.15, plus we add $0.20 for the difference between current price and strike price = $0.35 additional per coin)

If I was a miner taking you up on the offer here are the possible outcomes:

I list the option and put your $15.05 in my pocket.

1. July 27th price is above $7.00

Let's say the price is $7.10.

I owe you $7.10 - $7.00 (strike price) multiplied by 100 = $10.00

I sell 100 coins on Mt.Gox for a total of $710. I give you the $10 which leaves me with $700. However, I still have your $15.05 in my pocket, so that's a total of $715.05. So that's like selling my coins (when the price is $6.80) for $7.15 each which is 5% higher.
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2. July 27th price is exactly $7.00

Here I owe you nothing since there is no contract price difference. I sell 100 coins on Mt.Gox for $700, but I still have your $15.05 in  my pocket, so that's a total of $715.05. I still made 5%.
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3. July 27th price is less than $7.00

Let's say the price is $6.00. I owe you nothing because CALL options only pay when the market price is higher than strike price. I can sell my coins on Mt.Gox if I want, or I can wait until the price reaches $7.00 then sell. I still have your $15.05 in my pocket! I could also create more options on my coins!

So, miners, TTBit is ready to give you 5% selling premium (or more?) on 100 coins! You just need to create the option described above and place it on sell for him to buy.
_________________

Regarding a December 28, 2012 option, that's about 5 months into the future. We currently limit options to 3 months to help preliminary volume, and also reduce volatility risk resulting in insufficient escrow coverage.

To clarify this issue there was nothing to fix; it was a misunderstanding.

We have never accepted 6 character passwords, always 8 characters minimum. The 6 character length came from a comment I made to a poster who said he only felt secure with 12 character passwords, because our system assigned passwords (minimum 8 chars). I was trying to explain about password length.

I said security experts agree people should use at least 6 characters, uppercase, lowercase, and special symbols, and we used at least 8. The mistake I made was not qualifying that comment, and the group here (who specialize in computation power of all things) ripped into the 6 character length.  

When it comes to passwords the longer they are the more secure they are. Using a 150 character password, for example, would be great if everyone could do it, but usability becomes an issue. For most users the shorter the better; for example, no password or 1 character would be convenient, but that's not secure at all. So where should the lower bound be set? I said security consensus puts that at minimum 6 when using all the symbols, because I was speaking in general - for all sites on the Internet, the majority of which are not financial.

I still don't think I'm wrong in that, but my mistake was not qualifying the statement. For a community of hacking professionals, which is still a bit on edge from the Bitcoinica hacks, I can understand the quick and harsh backlash my comment drew.

However, listening to feedback we've adjusted our password procedure. We still assign a minimum 8 character password at signup, but include a note that users can set their own password anytime. This will hopefully discourage non-security conscious users from using passwords shared with other sites, while at the same time allowing users to set a password length they feel is very secure.

I will try to throw out a few bids on some call options, size 100. With the price here at 6.80 on 7/9, I'll pay $15.05 for the right to buy 100 bitcoins from you on 7/27 for $700. Sell the option to me, and you will be credited $15.05. Price stays under $7.1505 and you are better off. After that, you'll need to credit my account the difference.

I think I threw out a good price, but feel free to outbid.

Suggestion: Open up a december 28 2012 option, I would put a bid on a few 100 calls.

That's been fixed, IIRC.

That image is hilarious.

If you have any questions please ask

One of the goals in setting up BitcoinOPX is making options more accessible to people. It can be a hassle getting set up to trade in the real world, even with the advances in web based solutions. And then there are the trade fees. BitcoinOPX is meant to provide people better accessibility, sort of like Bitcoin itself does.

Hi - please be sure the redeemable code is USD and try again. We are working on this section for currency exchange between BTC and USD.

I'm guessing you're joking about miners and math... One could argue Bitcoin is thoroughly about math; if anything it's too mathematical and geeky for quicker mainstream adoption.

As for the current lack of volume (I'm still laughing about the Sahara bit) I think it's to be expected. The main reason to list options is to make money. If it's not readily apparent how to do that then no action will be taken. Something that dawned on me considering Bitcoinica's rapid adoption and success is how straightforward it was: you look at the price and if you think it's going up you buy, otherwise you sell... the site offers leverage either way to magnify your bet, and nobody else need be involved; as long as there is liquidity the order is filled. Simple, effective, and direct to profit (or loss).

Options on the other hand are not so straightforward. It can take a while to get the hang of them, and positions are not opened and closed in a matter of minutes, round-the-clock. Instead, options require a longer term view and more consideration of actions taken. They provide traders with more options and strategies because they are more complex.

Bitcoin is a small niche community, and the subset of people perfectly comfortable with jumping in and trading options must be far smaller.

Also, we've only just added trading other assets. So I think the site will do well given time, but won't have the fast explosion Bitcoinca did. And people are still recovering from that unfortunate loss.

I'm looking longer term and betting on Bitcoin's continued growth. Adding the currency exchange functionality should help with traffic, and possibly trade activity too.

As for security I don't know if you're familiar with the Linode hack, the first time Bitcoinica was hacked, but several other Linode hosted sites were also hacked. In the aftermath one site owner with Linode posted on the forum that he specifically wasn't gloating, but had to say when he heard about the hack he wasn't the least bit concerned. This was because he didn't have funds hosted on Linode. Not a cent could transfer without his manual authorization. I read that and nodded to myself because I knew I would handle things the exact same way. And so I have. Even if our website is completely compromised no funds can be moved because all withdrawals require manual approval.