CBOE to launch bitcoin futures trading on Dec 10, 2017

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arcticpineapplecorp.
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CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by arcticpineapplecorp. » Tue Dec 05, 2017 8:28 pm

not sure if this has been posted (looked for it and didn't see it posted, hard to believe). feel free to merge or delete if it's already been posted. The CBOE is launching bitcoin futures market on Dec 10th (link below). So for those of you who don't want to buy or sell bitcoin, you can instead bet on the future direction of bitcoin. The CBOE chief welcomed Jamie Dimon to start shorting bitcoin if he truly believes it's a bubble set to pop (second link below). Feel free to discuss. What effect would/could this have on the price of bitcoin if any?

https://www.cnbc.com/2017/12/04/cboe-an ... ec-10.html

https://www.cnbc.com/2017/12/05/cboe-ch ... tcoin.html
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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whodidntante
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by whodidntante » Tue Dec 05, 2017 8:50 pm

What about bitcoin pasts?

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am
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by am » Tue Dec 05, 2017 10:56 pm

arcticpineapplecorp. wrote:
Tue Dec 05, 2017 8:28 pm
not sure if this has been posted (looked for it and didn't see it posted, hard to believe). feel free to merge or delete if it's already been posted. The CBOE is launching bitcoin futures market on Dec 10th (link below). So for those of you who don't want to buy or sell bitcoin, you can instead bet on the future direction of bitcoin. The CBOE chief welcomed Jamie Dimon to start shorting bitcoin if he truly believes it's a bubble set to pop (second link below). Feel free to discuss. What effect would/could this have on the price of bitcoin if any?

https://www.cnbc.com/2017/12/04/cboe-an ... ec-10.html

https://www.cnbc.com/2017/12/05/cboe-ch ... tcoin.html
Practically, what does this change? Does this allow big institutional money into the mix? Is it the first step towards creation of etfs and other regulated investment vehicles?

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whodidntante
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by whodidntante » Tue Dec 05, 2017 11:13 pm

am wrote:
Tue Dec 05, 2017 10:56 pm
arcticpineapplecorp. wrote:
Tue Dec 05, 2017 8:28 pm
not sure if this has been posted (looked for it and didn't see it posted, hard to believe). feel free to merge or delete if it's already been posted. The CBOE is launching bitcoin futures market on Dec 10th (link below). So for those of you who don't want to buy or sell bitcoin, you can instead bet on the future direction of bitcoin. The CBOE chief welcomed Jamie Dimon to start shorting bitcoin if he truly believes it's a bubble set to pop (second link below). Feel free to discuss. What effect would/could this have on the price of bitcoin if any?

https://www.cnbc.com/2017/12/04/cboe-an ... ec-10.html

https://www.cnbc.com/2017/12/05/cboe-ch ... tcoin.html
Practically, what does this change? Does this allow big institutional money into the mix? Is it the first step towards creation of etfs and other regulated investment vehicles?
Futures are normally used for hedging or leveraged exposure to the price of an asset by anyone who wants that. I don't think this makes ETFs or funds easier, though some ETFs/funds hold futures.

alex_686
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by alex_686 » Wed Dec 06, 2017 11:18 am

whodidntante wrote:
Tue Dec 05, 2017 11:13 pm
am wrote:
Tue Dec 05, 2017 10:56 pm
Practically, what does this change? Does this allow big institutional money into the mix? Is it the first step towards creation of etfs and other regulated investment vehicles?
Futures are normally used for hedging or leveraged exposure to the price of an asset by anyone who wants that. I don't think this makes ETFs or funds easier, though some ETFs/funds hold futures.
I will take the opposite side, maybe.

How easy is it exchange large chunks of bitcoin to USD or back again. As I understand it the exchanges are fragmented, prices are variable across the exchanges, and liquidity is a mile wide but a inch deep. Futures could bring liquidity.

On another note, there is a difference between currency and money. Currency is used for exchanging things today, money is used to exchange things across time. Bitcoin is the opposite of a safe store of value. Futures are a partial solution. In a limited sense I can now lock in exchange rates over a period of time. In a expanded sense, commodities with futures tend to be less volatile than those who don't - another nudge of Bitcoin towards being money.

MP123
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by MP123 » Wed Dec 06, 2017 12:52 pm

As far as I know the only way to buy bitcoin through regular market channels currently is GBTC.

You can of course buy it through bitcoin exchanges and hold it in digital wallets too but my impression is that this is way too complex for many people.

Besides having a 2% expense ratio GBTC also represents only about 1/10 of a bitcoin. So at today's price of around $1700/share there's a huge premium priced in.

It will be interesting to see what happens when futures trading starts. That should allow even more people to speculate on bitcoin one way or the other while staying in familiar market territory and not having to deal with private keys and so on.

Rwsavory
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by Rwsavory » Wed Dec 06, 2017 12:57 pm

Creating a synthetic betting instrument to speculate on a synthetic currency whose main use is for speculation. The last "shark jumping" stage in this saga.

long_gamma
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by long_gamma » Wed Dec 06, 2017 1:08 pm

Rwsavory wrote:
Wed Dec 06, 2017 12:57 pm
Creating a synthetic betting instrument to speculate on a synthetic currency whose main use is for speculation. The last "shark jumping" stage in this saga.
Creating a synthetic betting instrument to speculate is actually a good thing. This asset is one way street up is because no one can short this thing till now. It provides liquidity to this market, which might dampen the volatility imo.
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson

Valuethinker
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by Valuethinker » Wed Dec 06, 2017 1:14 pm

long_gamma wrote:
Wed Dec 06, 2017 1:08 pm
Rwsavory wrote:
Wed Dec 06, 2017 12:57 pm
Creating a synthetic betting instrument to speculate on a synthetic currency whose main use is for speculation. The last "shark jumping" stage in this saga.
Creating a synthetic betting instrument to speculate is actually a good thing. This asset is one way street up is because no one can short this thing till now. It provides liquidity to this market, which might dampen the volatility imo.
You are undoubtedly correct in a theoretical sense. And also in the long term-- this may be another step on the path towards respectability for this thing.

However I wonder whether in the short term it might just create more speculative fervour? The problem is that just because one can short it, does not mean that people will. That will still be quite a risky thing to do (hence that letter to the CME about margin requirements, by an objector).

alex_686
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by alex_686 » Wed Dec 06, 2017 1:27 pm

long_gamma wrote:
Wed Dec 06, 2017 1:08 pm
Creating a synthetic betting instrument to speculate is actually a good thing. This asset is one way street up is because no one can short this thing till now. It provides liquidity to this market, which might dampen the volatility imo.
Maybe. Many futures require physical delivery. i.e., on the day the contract expires you need to pony up the physical pork bellies, oil, corn, currency, or treasury bonds.

The 2 being launched are cash delivery - which is what I took as the "synthetic" from the poster. You look at the index, figure out the cash value, and write a check. This is not necessarily bad - IIRC most of the stock index futures are cash delivery. But it does weaken the usefulness of the future as part of price discovery.

long_gamma
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by long_gamma » Wed Dec 06, 2017 1:42 pm

Valuethinker wrote:
Wed Dec 06, 2017 1:14 pm
You are undoubtedly correct in a theoretical sense. And also in the long term-- this may be another step on the path towards respectability for this thing.

However I wonder whether in the short term it might just create more speculative fervour? The problem is that just because one can short it, does not mean that people will. That will still be quite a risky thing to do (hence that letter to the CME about margin requirements, by an objector).
Small speculator may not short it, but bitcoin miner who wants to cash flow to hedge (for their electricity cost for example) probably will short some of his positions. Big banks who have deep pockets and think these are in speculative bubble will also participate in shorting. Spec. trading also introduces some speed bumps like circuit breakers of exchanges, which might pause some doubts in spot markets.

If and when derivative of derivative :D like future options are introduced, it will create much more liquidity and allow us to take defined risk positions.

Anyway I do not see having more liquidity is the problem.
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson

long_gamma
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by long_gamma » Wed Dec 06, 2017 1:46 pm

alex_686 wrote:
Wed Dec 06, 2017 1:27 pm
long_gamma wrote:
Wed Dec 06, 2017 1:08 pm
Creating a synthetic betting instrument to speculate is actually a good thing. This asset is one way street up is because no one can short this thing till now. It provides liquidity to this market, which might dampen the volatility imo.
Maybe. Many futures require physical delivery. i.e., on the day the contract expires you need to pony up the physical pork bellies, oil, corn, currency, or treasury bonds.

The 2 being launched are cash delivery - which is what I took as the "synthetic" from the poster. You look at the index, figure out the cash value, and write a check. This is not necessarily bad - IIRC most of the stock index futures are cash delivery. But it does weaken the usefulness of the future as part of price discovery.
There are many cash settled markets, which actually help the price discovery. In my case when i do the dispersion trading, I short the biotech index options(for example) and go long its component options, I am actually helping price discovery and liquidity
"Everyone has a plan 'till they get punched in the mouth." --Mike Tyson

alex_686
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Re: CBOE to launch bitcoin futures trading on Dec 10, 2017

Post by alex_686 » Wed Dec 06, 2017 2:04 pm

long_gamma wrote:
Wed Dec 06, 2017 1:46 pm
There are many cash settled markets, which actually help the price discovery. In my case when i do the dispersion trading, I short the biotech index options(for example) and go long its component options, I am actually helping price discovery and liquidity
I am not saying it won't help. I just think that physically setting futures tend to be better at price discovery and liquidity. Fewer ways to game the system. Well, fewer for intangible things like currencies and treasuries. Physical commodities is a different story. It also helps does a better job of developing a market for the actual things being traded, for example by establishing closer links between different exchanges.

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