3 ms·

Assuming he sold as many Bitcoin as he bought calls for, the options cost more than 20% of Bitcoin's highest price ever. (Black-Scholes is a harsh mistress.) c

• tomp 8y ago
  Maybe, but that literally makes no sense - there's no BTC price at which the (sell BTC + buy options) trade makes more money than the (keep BTC) trade (unless I miscalculated something, which is also an option).
  • patio11 8y ago
    Sell at ~$18k, pay $3.6k for the call, outperforms hodling in worlds where Bitcoin ends the year below ~$14.4k.
  • pathseeker 8y ago
    Do you mean the sell + buy options never makes more money, or do you just mean in this current case? Are you forgetting that you can leverage up with more options to offset that gap? Sell securities at $X, buy calls for 2x the number of securities you had with strike $X+$Y for $Y/10, and have the product go up to $X+($Y2). Profit = ($Y22) - 0.1$Y = $Y3.9. Keep the securities, have the security go up to $X+($Y2). Profit is $Y*2.
    • tomp 8y ago
      in this specific case, if the option is more expensive than what you're selling in the first place.