967900+ entries in 0.648s
mircea_popescu: say you bought calls and
they are now up. you can buy puts and pretty much lock it.
mjr_: but what i said earlier is
the reason why "martingaling" doesn't work over
the long run
knotwork: by selling
the right kind(s) of options can you ensure you never actually lose what you had, worst loss you could have is just not making as much as you might have if if you hadnt sold
those options?
mircea_popescu: however,
this is
the #1 risk i face. one day it will be
the case, and ima
try not
to get fucked
then.
mjr_: anyways, with my call, which is my favorite single legged strategy, i will prob just let it auto exercise at
the end of
the month
mircea_popescu: that's not actually
true. for instance all of asicminer is like 50-100k btc.
mjr_: the market can remain irrational longer
than you can remain solvent
mjr_: others bought at 699
thinking it couldn't go down
mjr_: some peple sold apple at $25 and
thought
they were genius's
mjr_: that is a perfect example of not being able
to find
tops or bottoms
mjr_: yeah, more
than likely,
they will wait and if it
turns around
they will exercise
there
mircea_popescu: they can't go retroactively and say i buy here i sell
there
mjr_: if i could pick bottoms and
tops, i would be a billionaire
mjr_: since
they can't kinow
that
knotwork: oh ok average helps make oracle resistant
to maniulating
to some extent
mircea_popescu: and in any event it's better
than bitcoinica-style forced liquidation event.
knotwork: so buyer just needs
to manipulate
the oracle into reportying a momentary low and exercise
knotwork: with options
that momentary down is where buyer will nail you
knotwork: whereas owning
the coins you dont care if
they go down if you "know" its just a matter of
time before
they go back up, aks
that
the momentary down is just momentary
knotwork: but with options
the guy you sell
them
to is going
to exercise
them at just
the worst moment for
the seller
mircea_popescu: which is why people were lolling at people who lost
their stuff in bitcoinica.
mircea_popescu: so in
this sense it can work as leverage, even as high as 10`000%
knotwork: ok, and seller gets $8 instead of 7 but faces loss if
they go down instead of up
mircea_popescu: if you buy 1 btc at 24,
then you risk 24. if you buy 1 btc synthetically via an option at 8, you risk only
the 8.
mircea_popescu: he paid
the extra whatever , 50 cents, a dollar,
to insure his 17 capital out of
the 24 against
the possibility of loss
knotwork: weird so why not just buy
the damn coin instead of
the option?
knotwork: so at buying coin for $17 at
that moment woud only have cost you $7 (over
the 17) instead of
the 8 you paid for mere option?
mjr_: i
think it will hit 30 by
the end of
the month (last friday)
mjr_: i believe when i bought
the option bitcoin was around $24/1btc
knotwork: how much were bitcoins price when people paid $8 for option
to buy
them for $17 ?
mjr_: ugh, i was an accounting major, but i don't do
that now because it aint fun
mircea_popescu: then when you do options value btc in
then-current vwap and add difference
to acct
mircea_popescu: mjr_
the excruciatingly precise way
to do it would be
to keep separate accounts.
BitHub: at
the
time or purchase
mjr_: because
that is how you show ridiculous gains against a failing dollar
mjr_: i have
to
translate back
to USD unfortunately
BitHub: i just write
the amount of btc and
the amount and
the
total amount i paid for it at
the
time.
mircea_popescu: (value of decision
to buy btc + value of decision
to buy option)
together
BitHub: i do it at
time of purchase mjr
mircea_popescu: mjr_ well you have
to decide if you keep books in btc or not
mjr_: do i calculate my average cost of bitcoins,
the price at
the
time of purchase, or
the price when i exercise....
mjr_: which adds in
the extra wrinkle of how do i calculate what i paid for
the option
mjr_: 0.33832578 bitcoins for
that option
knotwork: or I guess, paid $8 and had an additional fee for
the exchange of $0.30
knotwork: so
the $17 strike options price was $8.30 per coin for
the option?
mjr_: no...you are paying $17 (i bought
the right
to buy a bitcoin for $17) and I paid $8 for
that right
mjr_: it doesn't make sense
to use
that option unless
they are selling for $17+8
mjr_: but if i
tell you i will give you
that option for $8...
mjr_: you are paying for
the option
to buy bitcoins at $17
knotwork: what does
the $17 even mean if actual breakeven is 25.30 ?
BitHub: .5 btc coming up :) keep up
the good work
mjr_: in my case, yesterday my breakeven for
the $17 call was 25.30 i
think...
leotreasure: i haven't started accepting donations officially yet but i guess you could send
them here 1LeobZhdhmvQUpcdgF7MExR1CobUygUi5P
mjr_: if you just calculate
the breakeven for each of
the calls, you can find
the "cheapest" one and
then watch it rip lol
leotreasure: i'm going
to speak with
the head lawyer in Sydney in a few weeks
BitHub: i checked out
the site
today
BitHub: ahh, how did you go, get anymore answers
to your questions?
mjr_: the 17 strike option was a good deal i
think
mjr_: but yeah, options are
tough, i just got calls so i wouldn't get left behind
BitHub: hey leo, was it you i was
talking
to about
the aud law and stuff?
knotwork: maybe if one could find someone willing
to buy a put at current price you could make money going up due
to
they wont exercise it
mjr_: coinbase is
too fast...but especially overnight, if you go on camp bx or bitfloor...people leave
their limit orders up and you can get a bunch under $25
mjr_: specifically if you are fast on
the other exchanges you can get better
than mt. gox
mjr_: you can also arb
the exchanges
leotreasure: but you usually need
to buy below
the ask price
to have any kind of chance
knotwork: so options are useful
to insure against it going down but not a means
to increase
the profit one is making from it going up?
mircea_popescu: however people feel is irrelevant. we don't know for a fact nor is
there any clear mathematical proof
that btc only goes up.
mircea_popescu: this question presuposes
that one's state of mind is more important
than reality.
knotwork: If you are pretty confident bitcoins are just going
to generally keep going up and up, are options of much use, or are
they generally mostly useful if you are uncertain
thus want
to hedge against your uncertainty?
mircea_popescu: Bowjob yeah, most middle eastern languages are like
that.
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Bowjob: i didnt know arabic
text is from right
to left
BitHub: anybody ever
try out mpex, what's it like?
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