Topic: Miners, You Should Be Earning 7% Fixed Income With Options - page 3. (Read 10909 times)

Sounds good.

@Goomboo: Yes, I know. Can I get back to the tread topic now? 

I mean this really shouldn't be too hard to do...in fact, if you aren't already doing this, your exchange is broken.

I want to buy the option for $40.  Someone wants it more than me, so they bid $41.  Your webpage now shows $41 as the best bid.

Someone sells to the $41, taking the $41 off the book.  My $40 is now shown again as the best bid.

I just want to see the full depth that your exchange should be storing already.

I have a lot of reasons for needing it - it is one of the most used tools in active trading.  A significant percentage of professional short-term traders rely almost exclusively on market depth and time of sales.  It shows the positioning of the market as well as the velocity and volume of the market.

Relevant analogies:

-Would you go to a candy store if you only knew the price of one piece of candy and not the whole bag?
-Would you go to a party if you knew that only the most easily persuaded people would be there?

Ah, now I see what you're talking about. I still don't think it's a fair comparison. When this came up before you said you wanted to see "what the market was thinking". I hardly think the nine best bid/ask orders between nine real world exchanges will give you that.

But, as I said an orderbook on options may be added. It's already in the works for our contract for difference section for Gold, Euros, Stocks etc.

Not true man, but this isn't really worth talking about.  The issue at hand is that you need market depth for each traded instrument.

The equity order book shows the best bids and offers of competing market makers and large players.  If you have direct market access (DMA), then you can place a bid / offer on the book.

http://en.wikipedia.org/wiki/Direct_market_access

In the BTC world, all traders have DMA, so their orders must be on a book that can be seen and interacted with.

We're not connecting because you're talking about two different things. A comparison between exchanges of one instrument is not the same as the orderbook on an exchange for that one instrument.

Edit: I know what you want us to add. As I said we may add it. I'm not against the idea.

Yeah...I don't see how we're not connecting on this...instead of exchanges (as in the posted example), you put traders' orders...

bitcoin.clarkmoody.com

But there is only one exchange right now for our instruments, that's us.

That's what market depth is in the equity markets - a compilation of all executable prices from all eligible market markers sorted by best price.

Equity example:
http://www.realfasttrader.com/daslevelii.gif

That's exactly what you're looking at in the link I sent.

You really need to provide that for each instrument at each strike / maturity.

Yes, paying fees does generally enable access to more data. But the page you linked still doesn't appear to show depth of market, only real time quotes for best bid/ask, and comparison between the exchanges.

Yeah, here's what I mean:

http://www.schwab.com/public/schwab/resource_center/expert_insight/investing_strategies/options/whats_really_going_on_options_market.html

Howdy! :p

That's because you're looking at a flat view (level I) of the market.  I'm more familiar with the commodity markets (than equities), so I'll venture a guess that the reason you can only access the level I data is that the exchange requires you to pay some "professional" fee to access it (identical to level II quotes for stocks).

The way to show it (on your exchange) is to have a table show up when you click "trade" next to a quote.  It should show the full bids and offers for the specific instrument at the specific strike and maturity.

Hi @Goomboo, nice to speak with you again.  

Typically option chains show only the best bid/ask, and that is for each call/put at each strike price. Yes, each strike price is an entirely different instrument, but you won't typically find the detailed bids and asks for each instrument. If you know a way to do that I'd love to see it For example, here is the option chain for Google's stock:

http://finance.yahoo.com/q/op?s=GOOG+Options

However, as I said before when this topic came up Bitcoin is largely about blazing new trails, and if that's something that enough people want to see we may certainly add it.

Options chains actually do show open bid/asks.  Each put / call at each strike price is an entirely different traded instrument.  In other words, you need a full depth of market and time and sales for every single one.

On the Trade screen you can see the best bid/ask for each option. Typically option chains don't show open bids/asks, but do show open interest.

There is no volume yet. I think I have to explain the opportunities the site presents first. Bitcoin is still a relatively small community. You're right it may be a good idea to limit expiration dates. For example, a 2 month max contract term may be better than 1 year and would also help limit insufficient escrow due to volatility as I'll explain below.


This is the trickiest thing to solve, even in the real world   It's even harder due to bitcoin favoring anonymity.

First we backed options with bitcoins, but I thought that was too burdensome. A contract for difference model is far more flexible. For example, @Brunic says he is currently mining the 300 coins he will sell in the future, so he couldn't put them up for collateral beforehand anyway.

In our Beta feedback thread someone suggested using a formula to calculate escrow, so that's the direction we went. However, I'm now thinking that may be too complex and inadequate for coverage. I'm thinking to simply require escrow to cover a 50% price move.

That gives traders more solid payment assurance. They can feel safe buying with the potential to make up to a 50% difference in price.

In the example above it would mean, for example, putting up  $6.50 x 50% = $3.25 then multiplied by 300 coins = $975 into escrow.

That's a lot more burdensome on the option writer, but only half as burdensome as putting up the coins directly. And it gives plenty of upside room to speculators. The price could move to $9.75 and they would know they would be paid.


Thanks!

No us being a counterparty wouldn't be prudent, but there may be good interest in the speculation thread. It's chicken and egg, though, first the options have to be written before people can decide whether or not to speculate on them

Here I think you mean bitcoin futures. Thanks for your generosity You're right it is a great idea, and we're already working on it.

Since we settle using a contract for difference model - the advantage being traders don't need to own the underlying asset - we can really allow trading on anything with a price. We're working on adding Gold, Euros, Stocks, and of course bitcoins as CFDs.


No, we're just starting up. This is quite a complex trading site, and I think it will take a while to move in the complex traders  

But I'm working on it!

This is great stuff.  Hmm, no options listed yet :/

allright, Ill toss you an idea I intended to develop myself, but since you already have most of the work done, and my time is finite, you get it for for free. If it makes you rich, feel free to toss me some coins

Instead of only trading bitcoin options, add difficulty options, so that miners can hedge against future increases in difficulty. That would allow them to invest in mining hardware without taking on the full risk of their investment going south due to increases in difficulty, particularly now with ASICs on the horizon.

It's really interesting. Thanks for the great explanation! You can be sure I'll look into that