Good clip. Quote: "The more people use bitcoin, the more valuable it is. " So he should have bought puts, since adoption is shrinking.
A $9 million dumb mofo moment: "Honey, take out the trash!" http://money.cnn.com/2013/11/29/news/bitcoin-haul-landfill/index.html
We now know who was behind the $1 million bet that bitcoin will soar to $50,000 Ari Paul, a founder of BlockTower Capital. Kara Chin The Wall Street Journal reported earlier this week that a trader or group of traders made a $1 million bet on bitcoin going to $50,000 by next December. People familiar with the matter told Business Insider that it was the hedge fund BlockTower Capital. On Wednesday, an unidentified entity made a $1 million bet on bitcoin trading above $50,000 by next December. The cryptocurrency hedge fund BlockTower Capital was behind the bet, people familiar with the matter told Business Insider. The Wall Street Journal first reported the bet, made on LedgerX, a cryptocurrency options exchange. At that point, it was unclear whether one entity was behind the options bet and whether it was made up of one or more trades. The call options expire December 28, 2018, and would give BlockTower Capital the ability to buy 275 bitcoins at $50,000 a coin, should the cryptocurrency reach that price. BlockTower Capital is among the best-known crypto hedge funds in a booming space that now includes over 175 such firms, according to the fintech analytics firm Autonomous Next. BlockTower was founded by Ari Paul, formerly of the trading firm Susquehanna, and Matthew Goetz, a former vice president at Goldman Sachs. Paul tweeted about The Journal story on Thursday: Ari Paul@AriDavidPaul I wonder who bought these? https://www.wsj.com/articles/a-million-dollar-bet-that-bitcoin-will-hit-50-000-1513809578?mod=e2tw … 9:50 PM - Dec 20, 2017 A Million-Dollar Bet That Bitcoin Will Hit $50,000 An unidentified trader or traders just made a bet that bitcoin will surge above $50,000 next year, about triple its current price. He followed up by saying: "One thing to understand with options: a deep out of the money call is not a bet that something *will* happen, it's a bet that something *might* happen. Risk a little to win a lot." Bitcoin has been under pressure this week as bears storm the market. On Friday, it was trading down 16%, at $12,970, as the entire cryptocurrency market shed over $100 billion in market cap in just one day. Still, bulls remain resolute that better days are ahead for the crypto market. "The holidays are a notorious time for crypto prices to drop — that has been the case over the past several years," said Dan Novaes, the CEO of Current Media, a blockchain technology company. He added: "After the holidays, I expect the prices to rebound."
Agreed. I think it's a massive hedge on some short position - like that awful bitcoin etf that was trading at 100% premium a few months ago.
I kind of doubt. A short can only go 100% his strike price was 300% away, so by the time it starts working his shorts are dead. It should have been a 40K or even a 30K strike price if it was hedging. Also with perfect hedging they are not making money...
@sle, what would you put the ATM call on for that expiry? 1 year out?... 3500 for the 50k call seems very expensive... What was bitcoin priced at around that time... 15k?
If I recall correctly, it was ref 14.6 or something like that, what's what I back out vol based on (not that those 400 dollars would matter). I'd recon a fairly tight market would be 160 @ 220 vol, so say 62% @ 72% percent of spot. There will be a fair bit of trickery there, depending on the settlement model (USD cash? physical? cause with this shit it will matter a lot), ability to collect borrow rebate (which, apparently is 7%-10% p/a) and how you'd treat hedging disruptions, splits etc. Buying at 160 is likely to be a scary but profitable trade - on the days when it stops moving, paying that kind of theta would feel unpleasant
If I look at the prices now... I would say ATM vol is around 120-130 for Sep and Dec.. which seem fair. I don't get how you thing that call was IV of 275 though. Anyway... I think ATM at that time would have been 7k...? I don't get why he wouldn't buy that call instead... for half the size... better bet IMO. EDIT. cool... you can go back and look at the trade date... the Dec 15k call was 8.3k @ 9k Still the better bet IMO. FYI.. vols at those levels around 140 for ATM with spot around 16000 and 50k call about 130 with the trade price around 3500. Nothing I haven't seen before The call spreads at those levels are darn cheap though... He could've traded a 40/50k call spread at around 700 I think. Or the 30/50k at 2000... those would be superior trades IMO. (not that all those calls are available I guess, pretty dismal sheet if you ask me)
Lol, 56% @ 62%. I would have happily paid the offer there (and would have made out handsomely since then ) You sure? I did it on a phone calculator and it sort-of made sense (delta-adjusted to ATM and divided by 0.4). PS. Just did it on BBG and yes, you are totally right - there we go, the limits of approximations