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Bitcoin Options Purchased for $1 Million Will Soon Be Worthless (bloomberg.com)
"The biggest-ever bet on Bitcoin options is about to expire worthless," reports Bloomberg:
Purchased for almost $1 million on LedgerX's trading platform just days after Bitcoin peaked a year ago, the call options have a strike price of $50,000 and an expiry date of Dec. 28, 2018. For the contracts to retain any value at expiry, Bitcoin would need to rally more than 1,400 percent.
The options' almost certain wipeout is a less-than-ideal outcome for the buyer, but it may not be quite as bad as it seems. Ari Paul, a cryptocurrency fund manager at BlockTower Capital, has indicated that he bought the options while simultaneously selling some of his fund's Bitcoin holdings... He later tweeted that the trade -- selling some of his Bitcoin holdings while buying the call options -- was profitable.
The options' almost certain wipeout is a less-than-ideal outcome for the buyer, but it may not be quite as bad as it seems. Ari Paul, a cryptocurrency fund manager at BlockTower Capital, has indicated that he bought the options while simultaneously selling some of his fund's Bitcoin holdings... He later tweeted that the trade -- selling some of his Bitcoin holdings while buying the call options -- was profitable.
Please /. no more articles about Bitcoin market movements. This has nothing to do with science, technology, or news for nerds that matters. No matter where an asset moves, up, down, sideways, - unexercised options are always worthless.
Is someone gaming the market here in the same way the stock market sometimes fluctuates in suspicious manners?
Bitcoin is too fragmented to really "game" without being noticed.
More than obviously, on long term such [crypto]currency it's not and can't be sustainable.
Nothing of value was lost.
Fools and their money are soon parted.
Is someone gaming the market here
If they were, how would they be profiting from it?
... in the same way the stock market sometimes fluctuates in suspicious manners?
When shown randomness, people will perceive patterns where none exist.
Actual suspicious stock movements are usually caused by trading on insider information. How would that work with bitcoin, where information is public and there is no "inside"?
Says the man who bought in at the peak and wishes to god the peak would return.
He later tweeted that the trade -- selling some of his Bitcoin holdings while buying the call options -- was profitable.
I noticed that when you ask consistently losing gamblers how they're doing, they'll very often say they're about even, or maybe a little up...
Nothing to see here. Options are often bought to guard an opposite investment. If the asset moves in the unexpected direction, the option limits the damage. In this case the asset moved in the expected direction and the option wasn't exercised.
If you think $1 million could be enough to game the market, why are you even commenting on Bitcoin? One year ago, close to the height of the Bitcoin valuation, half a billion USD worth of Bitcoin were traded per day at just one exchange. The option was for 20 Bitcoin at $50000 each. That's less than the number of new Bitcoin currently mined with each block, on average every 10 minutes.
An article about a single options trade? Really? Has slashdot become a trivia site?
I get the interest in cryptocurrency. The field of full of nerd related news and interesting tech, psychology and social impact. But this, its just: here's the biggest bet gone wrong. Trivia.
There's tons of insider trading in the Bitcoin world and the market is gamed six ways to Sunday. Just not with with pocket money like this.
Unless you can control/manipulate the news cycle.
>If they were, how would they be profiting from it?
Sell millions of dollars worth of BTC options and then depress the price to ensure they're worthless?
but it may not be quite as bad as it seems.
FFS, just because you also made some other transactions that weren't flea bitten dogs doesn't make this transaction any better.
I have 1M Dutch Guilders worth of tulip options.
Does anyone know when the tulip market might rebound?
Asking for a friend.
"Buy high, sell low, that's how you do it... that's... oh shit! Wait... we did it BACKWARDS! NOOOOOoooo!"
As Rick "Gov. Goodhair" Perry famously put it, "oops."
Our reign has gone on long enough. Indeed. Summon the meteors.
There's tons of insider trading in the Bitcoin world and the market is gamed six ways to Sunday.
Can you explain how that is possible, even in theory?
The code is open. The blockchain is open. So who is the "insider"?
It is common to believe there are vast conspiracies behind every problem in the world. But most are caused by plain ol' stupidity and incompetence.
Sell millions of dollars worth of BTC options and then depress the price to ensure they're worthless?
How does one "depress the price" without losing money?
The collective value of all bitcoins declined by $200B in the past year.
Are you seriously claiming that someone dumped enough bitcoins to depress the market by $200B in order to make $0.001B?
The Flat Earth Society has a more plausible theory than that.
The price of Bitcoin isn't determined by Open Source code. It is influenced by many decisions that you and I will not learn about before the trades are already locked in. For example decisions about limiting Bitcoin use and trade in China, decisions by large mining pools to accept or reject protocol changes, decisions by large companies to start accepting Bitcoin or to phase out Bitcoin payments, and so on. The market is easily gamed because Bitcoin is very unevenly distributed and there is next to no oversight. Unsurprisingly the people who make decisions about the protocol are also close to people who got in very early and still hold the vast majority of all Bitcoin.
It should never have been traded in the first place. it should have remained a digital micro-payment platform.
Well if options are going to expire at the end of the year that explains the sudden price drops. It will pick in 2019 after "investors'" money (aka options) have been lost.
It's possible that someone is gaming the market unethically, but this is an example of how you game the market ethically.
The dude sold a bunch of BTC around $20k to lock in the gains, and then because he did not want to be out-of-luck if it kept going up he bought the option to buy back in at $20k. If the price is less then $20k the option is worthless, so the person who is on the other side of the contract got a free $50k. If BTC continued to increase that person could be in trouble.
It's called "hedging," and it is clearly gaming the system, but the only people who can be screwed are the people involved in the actual contract. Pretty much the only way it could affect the market is if the price went above that $20k strike price and the dude called the option by forcing the other side to sell BTC to him at $20k, because they'd have to get those BTC somewhere.
"How does one "depress the price" without losing money?"
By selling more in options than the cost of depressing the price?
By selling options and holding enough coin in reserve to tank the market?
As long as there are people with amounts of both coin and currency that the rest of us can't even truely fathom there are ways. A pool of hedge funds kept the entire AMD stock price depressed for months because they had a boatload of shorts at ridiculously low prices, but even having billions in shorts still left them plenty of money and connections to stock news orgs to game the price over the actions of millions of legitimate investors.
It's still at one Dogecoin is worth one Dogecoin! Inflation AND crash-proof!
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
bitcoin claimed it would replace the old, decrepit, corrupt financial system. turns out it was just another piece of that system.
in other words, the nerds were wrong. thats news that matters. please stop trying to destroy the government and all social institutions, there are actual reasons for some of them.
So the options will soon be worth the same as Bitcoin?
You're a fucking dumbass.
It's $1M worth of options, not $1M worth of bitcoin. So shut the fuck up with your ignorant ravings.
BTC was never meant to be collected or speculated. It was meant to be a frictionless trade system.
So can we get back to that now?? The transaction cost is relatively low enough now, don't mind paying for it. Cheaper than forex or Visa, etc.
So they subsidised the price of heaps of shares to new investors at discount prices, to ease losses on short positions? There's no free lunch, bigger players would come in over the top and pick up at those discount prices. You think a competing hedge fund wouldn't exploit this for all its worth?
Bitcoin can handle something like 7 transactions per second on the public ledger. The vast majority of trades are not on the ledger, they're derivatives. An exchange owns N bitcoins and holds them for their customers. Customers can trade them by simply updating the exchange's record of who it will pay the bitcoins to. If someone wishes to claim their bitcoins, the exchange will transfer them to that person's bitcoin wallet, though with the speed of processing that may take a day or two to actually go through (and will incur a transaction processing cost from the blockchain).
Because exchanges are unregulated derivatives markets, they can sell options and participate in all sorts of financial shenanigans that real financial markets have heavily regulated for around a century, without any oversight.
I am TheRaven on Soylent News
Slashdot is such a joke.
How about you cover all those options bets on securities that expire worthless? Oh that's right, doesn't' feed into your narrative about how Bitcoin is "dead".
News for nerds, my ass. You guys jumped the fucking shark a long time ago.
I'm sitting pretty good right now with my investment in quatloos.
"You think a competing hedge fund wouldn't exploit this for all its worth?"
Of course they did, but their goal isn't to bankrupt each other, they exploit it to their own profit not piss their funds away against the other hedge fund. Also the top players are so interdependent and incestuous they are basically all one team. The 60% who lose aren't the banks and hedge funds, they are the suckers trying to play the market honestly.
"So they subsidised the price of heaps of shares to new investors at discount prices, to ease losses on short positions?"
Seriously? This isn't a conspiracy theory or even a secret. It is public knowledge.
They kick started downward cycles alongside bogus analysis. They made profits on each wave as the natural market tried to push the price up in response to overwhelming positive news and they'd smack it down. Which is a net zero because the price is offset by a reduction in the negative balance on their shorts. When the price went down rather than up on fantastic news it would trigger a sell off by other people, and these losses are where the gains come from. Put the cherry on top with some paid friendly analysis saying AMD is overpriced. This went on over and over again throughout the entire AMD climb and kept the yo-yo in play for quite awhile between $10-16 and before that around $5.