Trading Bitcoin Options

A place to talk about speculative investing ideas for the optional Variable Portfolio

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bitcoininthevp
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Re: Trading Bitcoin Options

Post by bitcoininthevp » Tue Oct 08, 2019 11:04 am

TastyTrade has been come across my recommendations list as well. Will need to invest some time there and elsewhere.

The bad news is that Im dumb at this. The good news is that I know Im dumb.

Thanks for pointing me at the bull call spread. That seems to involve 2 options. What if I sell the covered call option and instead hedge with a futures long (entering at or around the strike). The advantages that I see with the future long are 1. I only enter it when price hits strike and 2. seems cheaper to enter/exit a long futures position than buying a call

I should also mention here, I am not concerned with regard to this trade on making money in USD terms. Im only interested in growing BTC denomination.
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Kbg
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Re: Trading Bitcoin Options

Post by Kbg » Tue Oct 08, 2019 4:00 pm

It is cheaper, but with futures you are on the hook for the entire amount if it heads south (mark to market). If in a long call and the underlying heads south you are only out the premium paid.

One additional recommendation...nothing like real money on the line to help really learn something/focus your attention. I personally would not go near uncovered bit coin options with a 10 foot pole given your level of understanding. However, after learning more you may want to experiment with something that involves not much potential for capital loss. Say for example a low priced stock with good volume that has options. You are most likely going to lose money if you do it for a while, but consider it tuition and not investing or trading.

I do futures, I do leverage, I do not do options as I find them incredibly difficult. There is a lot to learn and remember to do them well on a tactical level. I didn't lack the capacity to understand them, but they are just "hard" in many ways. Of course, someone who wants to sell you an options course will say they are easy and in a fashion they are. I'd say they are the most difficult thing I've ran into except for trying to understand treasury futures and their underlying finance calculations (cost of carry).
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bitcoininthevp
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Re: Trading Bitcoin Options

Post by bitcoininthevp » Tue Oct 08, 2019 8:06 pm

nothing like real money on the line
Totally agree. Great learning potential.
I personally would not go near uncovered bit coin options with a 10 foot pole given your level of understanding
Im not targeting uncovered options, but point taken either way.

Thanks for the discussion. I appreciate your perspective.
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Kbg
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Re: Trading Bitcoin Options

Post by Kbg » Wed Oct 09, 2019 11:02 pm

Good luck in whatever you decide, sincerely! Highly recommend building the knowledge bench a bit before jumping in however. There is a lot of info about various trading strategies with a fondness for bird and cow names but what you really need to learn is what drives option pricing.

Not sure how efficient the market is for bitcoin futures options but most options markets are incredibly efficient...one of the reasons I classify options as “hard.”
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