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by copumpkin 1941 days ago
The market is more liquid than it ever has been. But yeah, not as liquid as I or many others would like.

But if you really think it's gonna burst, there are plenty of eager sellers who would love to sell you some put options on LedgerX :) very above board, and the only CFTC-regulated physically settled BTC options exchange out there
1 comments
nabla9 1941 days ago
Where you buy and sell BTC derivatives for 1 - 5 year time span with minimal counterparty risk?
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copumpkin 1941 days ago
ledgerx.com is tightly regulated (all trades reported to CFTC) and physically settled with (in my opinion) very good security practices, but it's only available to US residents. Their longest expiry dates are December 2022, so about 2 years out. I haven't seen anything longer, unfortunately. Since it's physical delivery, when you sell an option, the exchange "locks" the coins or USD that would be required if it were to get exercised until the position is closed (either by expiring worthless, getting assigned, or if you trade out of it), so the counterparty risk is against the exchange only. They're aware that it makes people uncomfortable to lock up coins for a long time, so they work with BitGo to actually handle the coin custody, in separate accounts per customer. It's all reasonable enough to me that I feel comfortable sending them a decent amount of money.

Deribit is a larger derivatives exchange by trading volume, and is open to the rest of the world (explicitly not the US), but isn't physically settled so is more of a "side bet" and is riskier. That said, it's been operating successfully for a while now. I haven't used it because I'm not allowed to in the US.

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nullc 1941 days ago
Not only isn't deribit physically settled but the "cash" is Bitcoin-- my understanding is that there is no actual USD on the platform (like how bitmex works).

While this is a convenience for those of us that like Bitcoin exposure, it's probably a major downside for people who expect Bitcoin to lose lots of value, be outlawed, or even fail completely. :)

(plus, I would be uneasy about any cash settled product not just becoming irrecoverably insolvent in the event of the kind of black swan that a contract buyer would be hoping for...)

I'd say it would be worth asking LedgerX for 5 year contracts but I doubt anyone would be willing to sell them for prices people would be willing to buy them at-- and that assumption is supported by the fairly low volumes on the Dec2022 so far.

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nabla9 1941 days ago
>Deribit ... it's been operating successfully for a while now.

Deribit operates from Panama.

Typically these markets work well until there is finally some big event in the markets. Just when when big wins and losses are actualized they have "technical difficulties" or they just disappear.

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copumpkin 1941 days ago
Yeah, so that's why I was more hesitant about Deribit than I was about LedgerX. I have full faith in LedgerX the company and the regulator that oversees is. With Deribit you only really have a track record to go on, because if past performance fails to predict the future then you're kinda SOL.

But if you're outside the US I'm not sure there are many other choices. I think okex and bit.com might both offer some flavor of option, but last I looked were relatively tiny markets.

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