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>Bitcoin “probably won’t be here far into the future” said Johann Snorri Sigurbergsson Seeing as this guy -- who could make reams of money[1] if he's an accura

>Bitcoin “probably won’t be here far into the future” said Johann Snorri Sigurbergsson Seeing as this guy -- who could make reams of money[1] if he's an accurate price predictor by shorting bitcoin by buying deep, out-of-the-money puts -- isn't rich by doing so, indicates he's inept at making price predictions. https://99bitcoins.com/bitcoinobituaries/ https://99bitcoins.com/bitcoinobituaries/ [1] If bitcoin's price catastrophically collapses, a put option would yield ~1,000X / 100000% returns.

microtherion 8y ago
"The market can remain irrational longer than you can remain solvent."
- naveen99 8y ago
  Only if you are leveraged.
  - deleted 8y ago
    [deleted]
- DINKDINK 8y ago
  That's not how options work and it's precisely why options exist: to purchase value in domains which are extraordinarily rare without the delta exposure of leveraged spot-shorting. The premium:payout ratio of such a trade requires him to be right only once in 5-10 years for him to walk away profitable.
  - microtherion 8y ago
    He'd have to be right… against a solvent counterparty. What big, reputable players are selling Bitcoin put options at the moment? As of last fall, the market seemed to have been extremely immature: https://www.investopedia.com/articles/investing/033115/it-possible-trade-bitcoin-options.asp https://www.investopedia.com/articles/investing/033115/it-po...
    - DINKDINK 8y ago
      >What big, reputable players are selling Bitcoin put options at the moment? https://ledgerx.com/ https://ledgerx.com/
      - microtherion 8y ago
        "On May 22, 2017, Ledger Holdings Inc. announced the closing of $11.4 Million in Series B financing" That totally sounds like a well capitalized counterparty…
        DINKDINK 8y ago
        ? LedgerX isn't your counterparty. They are facilitating two parties to the trade I believe.
        microtherion 8y ago
        Hmm, I'm not 100% sure, but in traditional options markets, I believe it was the exchange that backed the trade: http://www.options-trading-education.com/34/counterparty-risk-in-option-trading/ http://www.options-trading-education.com/34/counterparty-ris... "In option trading on stocks risk management is handled by trading through standardized options contracts listed on futures and options exchanges. These markets provide accurate, up to date information, and back all contracts." If you're right, then the counterparty is not LedgerX, but some internet rando. Not sure that this would make me more complacent about counterpart risk.
        profquail 8y ago
        For “normal”, exchange-listed options in the US, the counterparty is the OCC (Options Clearing Corporation): https://www.theocc.com https://www.theocc.com
  - JumpCrisscross 8y ago
    > That's not how options work Repeatedly purchasing options to take tail risks is a bad strategy. (Repeatedly purchasing options to negate a tail risk you already have, on the other hand, could be smart. Or it might mean you have a great options salesman.) For the bet to pay off, it has to happen on schedule. With options relating to something like Bitcoin, moreover, there is the additional risk that catastrophic failure wipes out the exchanges, leaving you in years of litigation enforcing your contracts. (See this story of a short seller whose short went to zero [1].) [1] https://www.bloomberg.com/view/articles/2018-04-11/-go-to-zero-isn-t-great-for-short-sellers https://www.bloomberg.com/view/articles/2018-04-11/-go-to-ze...
  - dragontamer 8y ago
    > That's not how options work and it's precisely why options exist: to purchase value in domains which are extraordinarily rare without the delta exposure of leveraged spot-shorting. Yo, Options have Theta-decay. Push options too long, and all your money decays away. https://www.dough.com/blog/speaking-greek-theta-decay-time-decay https://www.dough.com/blog/speaking-greek-theta-decay-time-d... Seriously, don't just... buy options without understanding the risks. You can MITIGATE Theta-decay by rolling over your options to longer-and-longer terms, but it requires maintenance, and you still lose out on money each time you roll options over.
    - DINKDINK 8y ago
      >Push options too long, and all your money decays away. Assume you let all options expire OTM the following still holds: >The premium:payout ratio of such a trade requires him to be right only once in 5-10 years for him to walk away profitable. Minimizing theta exposure extends that duration.
      - dragontamer 8y ago
        If you buy a put option, someone sold that put option to you. Only one of you will be correct, and one of you has theta-decay (while the other person benefits from theta-decay). That's how the options market works. Someone pays theta-decay for the long-tail chance of hopefully being right sometime in the next year or two... while someone else collects that theta-decay over time. Its insurance, plain and simple. Sometimes, the insurance company wins, and sometimes the buyer wins. ----------- But with any trade, there's the other side. If you go long-put, someone else has decided to go short-put against you. Your final bet is that the short-put giver will actually give you the money when you win your bet. And that's a bet within the BTC market I don't believe in. Too many BTC markets have gone kaput, I'm not trusting anyone in this market.
        DINKDINK 8y ago
        Bringing up theta seems to be tangential to your concern: Solvency. Delta & Gamma have more applicability to solvency issues than theta
21 8y ago
There is nobody selling credible long term deep OTM puts.
- DINKDINK 8y ago
  Define credible
  - JumpCrisscross 8y ago
    > Define credible Will be (a) solvent and (b) willing and able to pay out if Bitcoin goes to, essentially, zero. "Willing" is an important limiter because when assets catastrophically crash they tend to take out their pricing infrastructure. So two parties may reasonable disagree about what something is worth at the time of option settlement.

microtherion 8y ago

"The market can remain irrational longer than you can remain solvent."

naveen99 8y ago
Only if you are leveraged.
- deleted 8y ago
  [deleted]
DINKDINK 8y ago
That's not how options work and it's precisely why options exist: to purchase value in domains which are extraordinarily rare without the delta exposure of leveraged spot-shorting. The premium:payout ratio of such a trade requires him to be right only once in 5-10 years for him to walk away profitable.
- microtherion 8y ago
  He'd have to be right… against a solvent counterparty. What big, reputable players are selling Bitcoin put options at the moment? As of last fall, the market seemed to have been extremely immature: https://www.investopedia.com/articles/investing/033115/it-possible-trade-bitcoin-options.asp https://www.investopedia.com/articles/investing/033115/it-po...
  - DINKDINK 8y ago
    >What big, reputable players are selling Bitcoin put options at the moment? https://ledgerx.com/ https://ledgerx.com/
    - microtherion 8y ago
      "On May 22, 2017, Ledger Holdings Inc. announced the closing of $11.4 Million in Series B financing" That totally sounds like a well capitalized counterparty…
      - DINKDINK 8y ago
        ? LedgerX isn't your counterparty. They are facilitating two parties to the trade I believe.
        microtherion 8y ago
        Hmm, I'm not 100% sure, but in traditional options markets, I believe it was the exchange that backed the trade: http://www.options-trading-education.com/34/counterparty-risk-in-option-trading/ http://www.options-trading-education.com/34/counterparty-ris... "In option trading on stocks risk management is handled by trading through standardized options contracts listed on futures and options exchanges. These markets provide accurate, up to date information, and back all contracts." If you're right, then the counterparty is not LedgerX, but some internet rando. Not sure that this would make me more complacent about counterpart risk.
        profquail 8y ago
        For “normal”, exchange-listed options in the US, the counterparty is the OCC (Options Clearing Corporation): https://www.theocc.com https://www.theocc.com
- JumpCrisscross 8y ago
  > That's not how options work Repeatedly purchasing options to take tail risks is a bad strategy. (Repeatedly purchasing options to negate a tail risk you already have, on the other hand, could be smart. Or it might mean you have a great options salesman.) For the bet to pay off, it has to happen on schedule. With options relating to something like Bitcoin, moreover, there is the additional risk that catastrophic failure wipes out the exchanges, leaving you in years of litigation enforcing your contracts. (See this story of a short seller whose short went to zero [1].) [1] https://www.bloomberg.com/view/articles/2018-04-11/-go-to-zero-isn-t-great-for-short-sellers https://www.bloomberg.com/view/articles/2018-04-11/-go-to-ze...
- dragontamer 8y ago
  > That's not how options work and it's precisely why options exist: to purchase value in domains which are extraordinarily rare without the delta exposure of leveraged spot-shorting. Yo, Options have Theta-decay. Push options too long, and all your money decays away. https://www.dough.com/blog/speaking-greek-theta-decay-time-decay https://www.dough.com/blog/speaking-greek-theta-decay-time-d... Seriously, don't just... buy options without understanding the risks. You can MITIGATE Theta-decay by rolling over your options to longer-and-longer terms, but it requires maintenance, and you still lose out on money each time you roll options over.
  - DINKDINK 8y ago
    >Push options too long, and all your money decays away. Assume you let all options expire OTM the following still holds: >The premium:payout ratio of such a trade requires him to be right only once in 5-10 years for him to walk away profitable. Minimizing theta exposure extends that duration.
    - dragontamer 8y ago
      If you buy a put option, someone sold that put option to you. Only one of you will be correct, and one of you has theta-decay (while the other person benefits from theta-decay). That's how the options market works. Someone pays theta-decay for the long-tail chance of hopefully being right sometime in the next year or two... while someone else collects that theta-decay over time. Its insurance, plain and simple. Sometimes, the insurance company wins, and sometimes the buyer wins. ----------- But with any trade, there's the other side. If you go long-put, someone else has decided to go short-put against you. Your final bet is that the short-put giver will actually give you the money when you win your bet. And that's a bet within the BTC market I don't believe in. Too many BTC markets have gone kaput, I'm not trusting anyone in this market.
      - DINKDINK 8y ago
        Bringing up theta seems to be tangential to your concern: Solvency. Delta & Gamma have more applicability to solvency issues than theta

21 8y ago

There is nobody selling credible long term deep OTM puts.

DINKDINK 8y ago
Define credible
- JumpCrisscross 8y ago
  > Define credible Will be (a) solvent and (b) willing and able to pay out if Bitcoin goes to, essentially, zero. "Willing" is an important limiter because when assets catastrophically crash they tend to take out their pricing infrastructure. So two parties may reasonable disagree about what something is worth at the time of option settlement.