[Daily Discussion] Friday, June 28, 2019 Bitcoin Markets |
- [Daily Discussion] Friday, June 28, 2019
- [Altcoin Discussion] Friday, June 28, 2019
- average response times for tickets on bitmex?
- Options: The Secret Weapon
- Lightning Network Study
- "Somewhat newbie" question about taking profits.
- Hum... Price Fluctuation in decimal range!
- How to earn daily :
- Still some weak hands to shake...
| [Daily Discussion] Friday, June 28, 2019 Posted: 27 Jun 2019 09:06 PM PDT Thread topics include, but are not limited to:
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| [Altcoin Discussion] Friday, June 28, 2019 Posted: 27 Jun 2019 09:06 PM PDT Thread topics include, but are not limited to:
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| average response times for tickets on bitmex? Posted: 28 Jun 2019 04:43 AM PDT I messed up temporarily using an US IP with a VPN so the engine restricted my account and wants me to close my positions within 7 days, this was a mistake, but does anyone know the procedure in such a case and more importantly what is the average response time for bitmex support? would suck having to close a position in the red or missing out on some big moves bc of this [link] [comments]  |
| Posted: 27 Jun 2019 07:59 PM PDT Imagine if you could pay for "insurance" either on the upside or downside of bitcoin, so for example, if the price moons, you can cash in, but if it tanks, you only lose what you paid for the insurance. This is effectively the idea behind Options, a financial 'derivative', and have been available in stocks for ages.
How Options Work You can probably google much better resources to explain options, but the quick run down is you choose a "strike price" which is the price of the 'underlying' the particular option you buy will be based around. You can buy either a 'call' (betting the stock will go up) or a put (betting the stock will go down). You pay a 'premium' (same idea with insurance) for the privilege of this contract. Call Option Example: Right now Bitcoin is at around ~$11,000. Let's say you do not own any bitcoin, but you think there's a high chance of bitcoin will go up hugely in the next week, but are also worried about a crash because you can't predict the future. You could buy a call option with a strike price of say ~$13,000. Technically, this gives you the right to buy 1 bitcoin (or whatever amount the contract spec says) at $13,000. You don't have to "exercise" the contract and actually collect the bitcoin (assuming it's not already cash settled), you can just resell the option contract, but we'll get to that. There will also be an expiration date, just like insurance, let's say a week. Let's say the price goes to $15,000 before expiration. Because your contract gives you the right to buy 1 bitcoin at $13,000, your contract is effectively worth $2,000. Therefore, your profit at that time would be $2,000 minus the premium you paid. When the price of the underlying passes the strike price this is called being "in the money". Now let's say the price tanks to $9000. If you had bought an actual bitcoin at $11k, you would would be down $2K. After buying an option, your option will remain "out of the money", and if it expires, your maximum loss is what premium you paid. However, until expiration, your option still has value because of the 'chance' the underlying price will go up. Therefore you can even sell your option at any time before expiration and not lose the whole premium. This is called "time value" and decreases the closer to expiration. (Note that the closer to expiration, and further from the strike price, the less it will be worth). Put Option Example: Put options are the just the reverse, where you bet the price will go down instead of up. It gives you the right to sell 1 bitcoin at the strike price. So if the price of bitcoin goes below the strike price, it lets you sell a bitcoin at a price higher than the actual price. So it is like insurance on a price dump. Again, even if you don't own a bitcoin to sell, you can sell the contract before expiration for profit, or if it's cash settled, the exchange just gives you the profit in funds at expiration, if applicable.
Wow this sounds great, what are the risks? Depending on how you use them, options can either increase or lower your risk. They must be used with care, because they not only require you to be correct directionally, but also the time-wise, and price-wise. Meaning if the price goes past the strike price after expiration, too bad. Also, if you are wrong in the direction of the price, you should assume you will lose the entire premium, which for bitcoin is not cheap. Deribit is the only exchange I know of that has options, but there is another company called LedgerX that just got approval in the USA and will apparently launch soon. Further, you have to carefully consider which strike price and expiration, because the premiums will be very different. For example, right now on Deribit, a 1-week option contract "At the money" (meaning right next to the actual price, so much more likely to go in the money if you are directionally correct) costs about $700. A contract with a strike price $2000 (~$13k) away from the current price costs about $400. A 1-month contract with a strike $2000 away costs over $1000. So you more pay for the longer time frame, and for a closer strike price. By the way, the prices are determined by the market, by buyers and sellers bidding, just like the underlying, just in a different way. (Yes, you can SELL options and get a premium, like selling insurance, but that's a whole different can of worms I won't get into). One consequence of this is because Deribit is not very liquid, there are big spreads on the contracts.
How to use options (personal opinion) I think options are best used in times of great uncertainty. Like that huge run up the other day. If you want to HODL but think there is a good chance bitcoin will crash in the short term, you could buy a put option to hedge against a drop and effectively "cancel it out". Or during a big dip like right now because I honestly am uncertain whether it will recover, so I sold my bitcoin position but bought call options. The options were not cheap but I'd rather reduce my upside by a bit in exchange for defining my downside. So in my case, if bitcoin does skyrocket in the next week/month (I bought 2 time frames), I will miss out on the profit from the range between the current price and the strike prices, but my upside is still unlimited. But if it tanks further, I am absolutely limited on the downside. Obviously another advantage of options is the leverage. You can effectively control much more bitcoin without having to use the full capital, but rather just the cost of the premium. [link] [comments]  |
| Posted: 28 Jun 2019 03:27 AM PDT |
| "Somewhat newbie" question about taking profits. Posted: 27 Jun 2019 07:25 PM PDT If someone (aka me) purchases BTC at a given price, and the price rises 60% and I trade some for Tether to "take profits" with an eye toward reinvesting it back into BTC......... Do I understand correctly that if I want to "reinvest the profits" or reinvest any of what I just sold, I need to BUY BACK LOWER than my average in order for me to come out ahead? Otherwise I am losing money? My gut tells me this is correct, but wanted to confirm with you. [link] [comments]  |
| Hum... Price Fluctuation in decimal range! Posted: 27 Jun 2019 07:28 PM PDT Ask those who have been in this crypto space for a long time and they will tell you the same thing. It all a question of decimal space! A transfer of value is occurring! In the first few years, the value of BTC was in the 100ths of dollars, and it would fluctuate in the 10ths, just one decimal point under! Either, up $20 or down $20, more or less. Then BTC moved in the 'K' range, and it fluctuated in the 100ths, just a decimal point below! Now, BTC has gone above 10k and will probably be in that price range for a while, considering the newly arrival of institutional money. It is thus normal for it to fluctuate 1 decimal point lower, that is in the thousands! So if you're just entering this space, hang on! Don't be impressed by fees and fluctuation. Just step onboard, cause when the ship sails, you're not gonna want to be left at the dock! For those of you who understand BTC and its 8 decimal space format, HODL, the best is yet to come! ;-) [link] [comments]  |
| Posted: 27 Jun 2019 07:53 PM PDT Enter the #LiquidityPool today and earn profit daily Get started in 3 simple steps 👇
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| Still some weak hands to shake... Posted: 27 Jun 2019 12:57 PM PDT Maybe a number of the people who bought near the top decided to cut losses when bitcoin did not break through 14000$. With some traders amplifying the movement when they saw a reversal. I just wonder what the bottom of this correction will be? But having seen this a few times, I surprise myself by the ever increasing lack of emotion in face of this rollercoaster :) Eventually, bitcoin is becoming more mainstream in financial circles day by day, week by week and month by month. Wake me up when bitcoin breaks 25000$. (Yawns and rolls to his other side) [link] [comments]  |
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