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These are both good points, I added to my comment that Bitmex didn't touch USD since it's relevant. The gambling problem is absolutely true, but it's difficult

by ve55 6y ago

These are both good points, I added to my comment that Bitmex didn't touch USD since it's relevant. The gambling problem is absolutely true, but it's difficult to know how to approach it properly, since it's obvious that there's people gambling just as badly on brokerages in the US right now, primarily with options (especially Robinhood).

nullc 6y ago
I think the risk surface with options can be significantly better-- e.g. if no margin is used for longs and if short calls are covered and short puts are cash secured, then the exposure is fixed and established upfront. But I don't disagree that the there are much larger and more relevant gambling-in-the-guise-of-investing targets. Also to be clear: I think there are legitimate investment uses of that product-- e.g. if you have a credible reason to believe the Bitcoin price will drop soon you could short a small amount with leverage while keeping the bulk of your holdings safe in cold storage. The extra fees and specific risks of the CFD may be offset by avoiding a need to touch cold coins. But I do also doubt that most users are using it that way.
- ve55 6y ago
  It can be much better, but a quick glance at what a lot of retail investors are actually doing with options (basically just buying calls) shows a lot of high-risk and reckless gambling. While I'm fine with people choosing whichever risk level they desire, some of the images I've seen of e.g Robinhood UI's are pushing it far beyond what I'd say is reasonable (and perhaps even to the point of illegality), for example https://pbs.twimg.com/media/EtfOof8XIAMhaX6?format=jpg&name=medium https://pbs.twimg.com/media/EtfOof8XIAMhaX6?format=jpg&name=...
  - nullc 6y ago
    oy. That UI is ... not great. Buying a three (?) month call which is out of the money by 4.8% is "medium risk" ?!?. Too bad there isn't a date on that image so I can figure out what the black scholes probability of expiring worthless they consider 'medium risk' is exactly. -- Assuming it's 90 days, they consider a 63% probability of total loss "medium risk".
    - inter_netuser 6y ago
      would you consider it a high risk?
      - nullc 6y ago
        For a lottery ticket? No. For an investment? Yes. I'm not really sure where I'd draw the line but anything where my best model said total loss was more likely than not is certainly past the high risk line. And high risk investments can be totally fine, treated as such. Presumably most users won't go broke losing one contract worth though it might hurt some (I'm assuming that isn't a mini option or some kind of split contract-- so we're talking about a $788 loss for one contract if it expires worthless). But if they call it "medium risk" I'm guessing people are going to buy more than one.
- keypusher 6y ago
  BitMex offers 100x leverage, which is quite dangerous in any market, but in one as volatile as cryptocurrency is almost certain to wipe out your account very quickly.

by ve55 6y ago

nullc 6y ago

I think the risk surface with options can be significantly better-- e.g. if no margin is used for longs and if short calls are covered and short puts are cash secured, then the exposure is fixed and established upfront. But I don't disagree that the there are much larger and more relevant gambling-in-the-guise-of-investing targets. Also to be clear: I think there are legitimate investment uses of that product-- e.g. if you have a credible reason to believe the Bitcoin price will drop soon you could short a small amount with leverage while keeping the bulk of your holdings safe in cold storage. The extra fees and specific risks of the CFD may be offset by avoiding a need to touch cold coins. But I do also doubt that most users are using it that way.

ve55 6y ago
It can be much better, but a quick glance at what a lot of retail investors are actually doing with options (basically just buying calls) shows a lot of high-risk and reckless gambling. While I'm fine with people choosing whichever risk level they desire, some of the images I've seen of e.g Robinhood UI's are pushing it far beyond what I'd say is reasonable (and perhaps even to the point of illegality), for example https://pbs.twimg.com/media/EtfOof8XIAMhaX6?format=jpg&name=medium https://pbs.twimg.com/media/EtfOof8XIAMhaX6?format=jpg&name=...
- nullc 6y ago
  oy. That UI is ... not great. Buying a three (?) month call which is out of the money by 4.8% is "medium risk" ?!?. Too bad there isn't a date on that image so I can figure out what the black scholes probability of expiring worthless they consider 'medium risk' is exactly. -- Assuming it's 90 days, they consider a 63% probability of total loss "medium risk".
  - inter_netuser 6y ago
    would you consider it a high risk?
    - nullc 6y ago
      For a lottery ticket? No. For an investment? Yes. I'm not really sure where I'd draw the line but anything where my best model said total loss was more likely than not is certainly past the high risk line. And high risk investments can be totally fine, treated as such. Presumably most users won't go broke losing one contract worth though it might hurt some (I'm assuming that isn't a mini option or some kind of split contract-- so we're talking about a $788 loss for one contract if it expires worthless). But if they call it "medium risk" I'm guessing people are going to buy more than one.
keypusher 6y ago
BitMex offers 100x leverage, which is quite dangerous in any market, but in one as volatile as cryptocurrency is almost certain to wipe out your account very quickly.