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More specifically, it allows one to short with limited downside. There are some exchanges that provide naked short positions in Bitcoin, but those have theoreti
by jjxw 9y ago
More specifically, it allows one to short with limited downside. There are some exchanges that provide naked short positions in Bitcoin, but those have theoretic infinite downside and your broker will force you to liquidate at a loss at a certain point.
With futures, however, you can put together positions that will provide a known limit on your downside for short positions. This provides a more appealing avenue for shorts to get in with much less risk.
- cm2187 9y agoI am not sure I get how the risk is limited with a future. If the price goes to $1m when you traded at $16,000, you will have to make a $984,000 margin call payment (+margin).
- kgwgk 9y agoWith a short position using futures you will also be forced to liquidate at a loss at a certain point. It’s not really different from shorting BTC.