The point is that if the price goes up, the call option price goes up faster, and then the trader can sell it before it reaches 50k. Liquidity though may be an issue.
EDIT: what matters is that it is _possible_ that bitcoin goes to 50k next year. And since it is possible, people need to take that possibility into account in their strategies. It's like S&P option strike range for dec18, it goes from 1700 to 3100. Is it likely that SP price goes down to 1700 in the next year? no, but it's certainly possible.
Also there's a back of the envelope implied volatility for Bitcoin here: on a $3k call option premium 12 months out (so breakeven on this "bet" is actually $53,000) Bitcoin implied volatility of around 120%? Not that equity option pricing model theories apply to Bitcoin, or even work as expected on equities for that matter, but it's interesting to see an implied volatility number regardless. Looks like Delta less than 10. With Futures already 3 months out at $17,000 it would seem like whoever sold this call option for $1 million could hedge (not perfectly hedge) the trade for less than $1 million. Oddly enough, both the buyer and the seller could end up profiting on this option trade.
I agree this article is very bad, it feels like a paid PR article advertising for the trading company not actual news.
The implied volatility at which this option traded is pretty irrelevant for helping us understand the option market as a whole, since it's so far out of the money. We don't have much information about what the upside skew would look like. And due to vanna, that delta calculated off that implied volatility is irrelevant too.
The number of times LedgerX was mentioned made me suspect that immediately.
No, it actually is a ludicrous bet. No rational investor would ever make this investment. The absolute max value stands at less than a third of that. This sort of call only makes sense if it's designed to manipulate fools into a buy spree to supply liquidity to mask a massive cashout.
> Bitcoin tripled in value
Ah yes, and lightning will certainly hit the same person again and again.
Do you happen to have any money on bitcoin by any chance?
What can you actually do with Bitcoin, then?
That’s called gambling, not investing. Albeit many mixup the two concepts quite frequently, they are distinct.
It's feasible that the emitter owns 275 BTC already (or more), and is happy to give up the upside beyond $50,000 on 275 of them for $1m cash now (in other words, he wrote a covered call). That's the most likely scenario in my view.
(If you delta hedge, you could manufacture the call, and then are not so much exposed to the price of BTC, but to its realised volatility to expiry; the emitter would be short vol: if vol is higher than expected, they'd spend a lot on the delta hedge (due to gamma), if vol is lower, they'd spend less and make money.)
It's
Slow peer-to-peer transactions High processing fees
Average fees are approaching 40 dollars. That's an average. Unconfirmed transactions are at an ATH of 260k... has been at over 100k for weeks. The mempool is also at an ATH. The Bitcoin is crippled and nothing more than a "store of value". Sentences like "store of value" are now the term used to describe Bitcoin. Very far from what the Bitcoin used to be.
I think there is a real possibility of a "death spiral of the blockchain". Fees will increase and it will become impossible to move coins on the blockchain besides the upper 10% of bitcoin holders.
The fork that occurred on 1st August created Bitcoin Cash. This fork is much closer to what the Bitcoin was. Bitcoin Cash is this today. Removal of the segwit code (which hasn't solved anything), disabling of RBF (replace-by-fees) enabling 0-confirmation transactions again. A new DAA (difficulty adjustment algorithm). Finally increase the block size to 8MiB.
The Bitcoin has been crippled on purpose by Blockstream deep in the pockets of bankers and insurance companies. Blockstream is the main contributor to the Bitcoin development. Look at the sponsors; https://www.blockstream.com/about/#investors
Before the bankers, and their followers, got indirectly involved in Bitcoin development there never was any discussion about limiting the block size to 1MiB; in fact the opposite was discussed. See; https://twitter.com/adam3us/status/636410827969421312?lang=e... https://bitcointalk.org/index.php?topic=1314.msg15143#msg151... https://np.reddit.com/r/btc/comments/71h884/pieter_wuille_im...
Now all of this has led to a complete divide and clusterfuck of the community. It is an very ugly and toxic environment and is sad to look at. On top of that we now have thousands of alternative coins and blockchains.
Just my 2 cents ;) Happy Christmas and new year to all!
Statistics like these should be more prominent in the argumentation. Regardless of any technical discussion of the merits of SegWit vs. big blocks, there isn't any doubt in the usability of the system as is compared to as before.
The Bitcoin bubble could explode tomorrow or next year or just possibly it could find a way to become self sustaining (seems unlikely). It could repeat the crash-peak-crash pattern. It could do anything and analysis seems essentially pointless.
For god's sake, no one in their right mind trades naked options - neither the seller nor the buyer. Given the historical volaitity of bitcoin rising from 1000 to 16000, it shouldn't be surprising at all that someone wants to hedge (a concept which seems alien to the writers) their positions.
The missing information is - what premium did it cost to secure the trade? Well, as per the data ~ $3600, which at current price is nearly 20% of the current price. Very costly premium for a very volatile product.
Remember, we're talking about the same market and investors that brought us Dentacoin and Wu-Tang Coin.
and yes, the data says 3600 for the call, which is the definition of a premium. nothing missing, guys. seriously. do more thinking before you post.
seriously no joke, I am the CEO there, former trader at Goldman so I sort of know what I am talking about with this type of stuff. You guys do not. It's hilarious to watch this conversation.
Can I ask who books writing a large trade like this? Basically are you making this market and $1 million dollar trade like this would need to contact you guys to write it OTC? Or is the crypto options market supply that big and liquid already that a buyer can just come along and buy $1 million worth of Dec 18 Bitcoin call options that will clear?
That all said, I got curious and started mining with my gaming machines, and apparently I now have around $1K in various cryptocurrencies (half an ether, half a ZEC, some SIA, some ETN, a tiny piece of a monero, a few other little bits and pieces). The only money I've put in is through the electricity bill. I may find a way to cash out eventually, but at the moment I'm just going to hang on to it all and see where it is a year down the line. I don't believe in any of it - but I know other people do so there might be an opportunity to make some money.
Ironically, I've been looking to buy some Bitcoin in the last couple months to trade for Sia, because I was thinking about setting up a storage node that can earn enough to pay for my own cloud backup needs.
Two year Bitcoin volume when measured in BTC seems relatively stable while the price goes up and up and new speculators come in. As long as the price goes up the same pace as demand, there is no upper limit to the price level that steady supply of bitcoin can support.
At the same time the market gets thinner and thinner relative to the bitcoin wealth. At some point the social mania around bitcoin peaks and speculators want to liquidate more than there is buyers.
Either way, they can sell from month options to finance the cost of their back month speculation, bringing their cost basis to zero or even less.
Now they would have a free trade that still has the whole upside potential, even better than a lottery ticket.
And finally, if it doesn't look like the bet is going to pay off within the last 3 - 6 months, they can rollover the long contract into the December 2019 options, mostly financing the purchase of the new long dated contract.
Options allow you to control risk, which is why it isn't inherently a risky bet.
If on the other hand you buy 10 $50k call options at $2k each then if Bitcoin hits $60k you'll get ($60k-$50k)*10 or $80k profit ($100k - $20k initial investment). Basically you're doubled your profits without increasing your investment.
On the flip side if Bitcoin 'only' hits $40k, you'll have lost $20k if you bought the call (since calls are worthless if the asset doesn't reach the target price), but made $20k if you'd bought the bitcoin.
Basically calls allow you to take bigger bets with less money up front.
If they're covering a short position then this is just akin to insurance to limit the downside. Entirely sensible and the reason why they were invented in the first place.
People forget about the drugs, guns and human-trafficking that built Bitcoin.
It may have started as a response to the corruption in the banking system, but that's not how it got to where it is now.
Also, pretty sure Cash and Banking trumps Bitcoin in all of the following: terrorism, human-trafficking, drugs. Shell companies and weird schemes having been used and are used for a long time.
Final note, I argue that a lot of Venezuelans and Zimbabweans are thankful Bitcoin exists and they are not destroyed by the irresponsibility of governments.
Somebody also sold these options. That person is betting that Bitcoin will NOT go over $50k next year.
This includes many old addresses that didn't hash the public key, any re-used addresses, and, using replace by fee, even all new addresses in the time frame between broadcasting a spend transaction and that transaction being included in a block (which can currently take many hours).
1) What's the probability of the cryptographic ciphers behind cryptocurrencies being broken?
2) If they were broken, is it possible to 'move' BTC or other coins to a new cipher?
I apologize if I'm using the 'cipher' terminology incorrectly.
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