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You need whichever exchange you entered the position on to exist, and ensure payout when the position is closed/expired. FTX is irrelevant. If the exchange is

by dibt 4y ago

You need whichever exchange you entered the position on to exist, and ensure payout when the position is closed/expired. FTX is irrelevant. If the exchange is doing it's job properly, it would ensure there's a long position for every short position. It's the trader/market maker on the other side that pays you. The premium is what attracts your counter party to the trade. In the case of FTX, there wasn't a problem with the counter party, it was a problem with the exchange playing with the customer deposits that should have been left untouched.

vkou 4y ago
> In the case of FTX, there wasn't a problem with the counter party, it was a problem with the exchange playing with the customer deposits that should have been left untouched. I have two questions, because unlike with the other crypto drama, I'm late to this party. 1. Is that actually what happened? 2. If the answer to #1 is yes, why does this still keep happening? We're in 2022, how many times has this played out, already?
- dibt 4y ago
  >1. Is that actually what happened? Yes, this is our best guess based on all current facts. https://www.bloomberg.com/opinion/articles/2022-11-09/bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal https://www.bloomberg.com/opinion/articles/2022-11-09/bankma... "The problem is that FTX took its customers’ money and traded it for a pile of magic beans, and now the beans are worthless and there’s a huge hole in the balance sheet." >2. If the answer to #1 is yes, why does this still keep happening? We're in 2022, how many times has this played out, already? This is a common occurrence during bear markets. The non-US crypto exchanges are (self|minimally|un)regulated. FTX is the biggest blow-up, and surprised many experienced people. As Warren Buffet says: “It's only when the tide goes out that you learn who's been swimming naked.” It's also rumored that FTX/Alameda were hit hard by the LUNA/Terra collapse early this year. They may have tried to cover it by manipulating the tokens they control, and trading with customer deposits. It's not unique to crypto. LME (London Metals Exchange) had an issue this year with someone short nickel that didn't want to payout. Also, Archegos capital ran up much more leverage than they should, which resulted in loses at several prime brokers. This was due to the brokers not margin calling them sooner. Credit Suisse had to close their broker services unit afterwards.
thaumasiotes 4y ago
> You need whichever exchange you entered the position on to exist, and ensure payout when the position is closed/expired. FTX is irrelevant. You need that if you're long, unless you have ownership [almost always true...] in which case you can just close out your long position on some other exchange. You don't need it if you're short, because you get your payout immediately when you go short; closing out a short position is always a loss for you. (You profit when the loss from closing the short is smaller than the gain you got when you took the position. If you never need to close it at all, that's the best-case scenario for your short position.)
- dibt 4y ago
  >You don't need it if you're short, because you get your payout immediately when you go short I don't know of any exchange that would let you withdraw premium before the short position was closed/expired. If you thought that happened once before, it's only because you are using margin collateralized with other assets on that exchange.

by dibt 4y ago

vkou 4y ago

> In the case of FTX, there wasn't a problem with the counter party, it was a problem with the exchange playing with the customer deposits that should have been left untouched. I have two questions, because unlike with the other crypto drama, I'm late to this party. 1. Is that actually what happened? 2. If the answer to #1 is yes, why does this still keep happening? We're in 2022, how many times has this played out, already?

dibt 4y ago
>1. Is that actually what happened? Yes, this is our best guess based on all current facts. https://www.bloomberg.com/opinion/articles/2022-11-09/bankman-fried-s-ftx-had-a-death-spiral-before-binance-deal https://www.bloomberg.com/opinion/articles/2022-11-09/bankma... "The problem is that FTX took its customers’ money and traded it for a pile of magic beans, and now the beans are worthless and there’s a huge hole in the balance sheet." >2. If the answer to #1 is yes, why does this still keep happening? We're in 2022, how many times has this played out, already? This is a common occurrence during bear markets. The non-US crypto exchanges are (self|minimally|un)regulated. FTX is the biggest blow-up, and surprised many experienced people. As Warren Buffet says: “It's only when the tide goes out that you learn who's been swimming naked.” It's also rumored that FTX/Alameda were hit hard by the LUNA/Terra collapse early this year. They may have tried to cover it by manipulating the tokens they control, and trading with customer deposits. It's not unique to crypto. LME (London Metals Exchange) had an issue this year with someone short nickel that didn't want to payout. Also, Archegos capital ran up much more leverage than they should, which resulted in loses at several prime brokers. This was due to the brokers not margin calling them sooner. Credit Suisse had to close their broker services unit afterwards.

thaumasiotes 4y ago

> You need whichever exchange you entered the position on to exist, and ensure payout when the position is closed/expired. FTX is irrelevant. You need that if you're long, unless you have ownership [almost always true...] in which case you can just close out your long position on some other exchange. You don't need it if you're short, because you get your payout immediately when you go short; closing out a short position is always a loss for you. (You profit when the loss from closing the short is smaller than the gain you got when you took the position. If you never need to close it at all, that's the best-case scenario for your short position.)

dibt 4y ago
>You don't need it if you're short, because you get your payout immediately when you go short I don't know of any exchange that would let you withdraw premium before the short position was closed/expired. If you thought that happened once before, it's only because you are using margin collateralized with other assets on that exchange.