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As far as I can tell it's just a way to outsource holding the BTC. A BTC future can be perfectly hedged by taking a loan until the settlement date and using it
by devit 9y ago
As far as I can tell it's just a way to outsource holding the BTC.
A BTC future can be perfectly hedged by taking a loan until the settlement date and using it to buy 1 BTC, holding it until settlement and then selling, so that's probably what the counterpart selling the future is doing.
- vasilipupkin 9y agoNot quite, since futures are marked to market every night, there is additinal cash flow relative to your scenario
- ithinkinstereo 9y agoAs others have mentioned, contracts are marked-to-market on a daily basis, which impacts the margin needed to hold the contract. With wide price swings, this can force you to close your position before it settles in order to meet margin, especially if you're trading with leverage. CBOE also has a really high margin requirement (I think 40%+), so the capital costs to play are quite high here.