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Bitcoin Futures by the CME


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Bitcoin Futures by the CME

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  #21 (permalink)
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@tpredictor in response to your post responding to @SMCJB

After reading your post, and many others, I can explicitly say you are dealing in a world of impractical idealism.
You create theoretical assumptions, treat them as universal facts, and build more premises on top of them.
I have been doing this for a long time, and you present a small fraction of the Futures world. The CME which has built the largest and most liquid Futures exchange. They serve the interests of many players, and if yours don't fit, well maybe you trade another asset class.

Let's deal in a world of facts. If we don't deal with practical issues, we are going to create problems, not progress.
CME is not going to change the size of the contracts and pricing so let's stop discussing it. Let's consider technologies for execution and methods for implementation once the Bitcoin Futures contracts are launched.

Capital is essential when you start trading. But, a realistic approach, one where you accept specific variables are fixed and can not be changed may lead traders down the right analysis and not waste time with what's unfair. Realism is a scarce commodity.

What many traders or potential futures traders miss are the right and realistic direction. Sadly, as I mentioned in other threads, 3rd party vendors created a world of virtual reality for traders where the impossible is possible. If we can put traders on the right track, I am sure many could have a better chance of success.

One of the reasons that I requested a thread specific to this topic was because I wanted to discuss the CME contract, not all the OTC that is around. Again, let's see what will happen when the contract launches. Maybe it will be an epic failure, or perhaps it will be a remarkable success stealing all the large traders from those OTC players. They could only wish they had the CME's capacity for execution and fairness in dealing.

Thank you,
Matt Z
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Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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  #22 (permalink)
SpeculatorSeth
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mattz View Post
perhaps it will be a remarkable success stealing all the large traders from those OTC players.

I believe that any large fish would have to be in both markets. If all of the large players decide to play in the futures instead of the exchanges, then the exchanges are just left with small fish and arbitrage robots. That becomes a problem when it's a cash settled market, and the action in the exchanges are what ultimately decides the price.

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  #23 (permalink)
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TWDsje View Post
I believe that any large fish would have to be in both markets. If all of the large players decide to play in the futures instead of the exchanges, then the exchanges are just left with small fish and arbitrage robots. That becomes a problem when it's a cash settled market, and the action in the exchanges are what ultimately decides the price.


This is just my opinion from what I read. It seems that in the cash market most large players are long-term holders. This is reflected in the additional services that the exchanges offer such as cold storage of Coins.

Many of guys that do open accounts on the cash exchanges are mainly very small spec guys who use leverage and/or just jump from one exchange to another trying to pick a winning ICO or just playing what moves most. They all missed out on Bitcoin and now they buying coins with the hope it is the next big thing. 99% of them are scams because the coin has zero utility and has nothing to do with the project.

I did contact the CME today via email to see if I can get further info on this contract.

Thanks,
Matt Z
Optimus Futures

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Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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  #24 (permalink)
SpeculatorSeth
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mattz View Post
It seems that in the cash market most large players are long-term holders. This is reflected in the additional services that the exchanges offer such as cold storage of Coins.

Well this is certainly true, but that's the other half of the problem! There's not really any derivatives to speak of, and you'd have to borrow bitcoins to short it (very difficult). The investors believe this is the future of money, and therefore there is no incentive to sell it. So you end up with a huuuuge imbalance between buyers and sellers. Prices get driven up insanely high whenever new demand comes in, like those buying to play the upcoming fork. What I wouldn't give for a put option!

A future would be a big change because it would introduce professional market makers, and that would completely change the dynamic. This would drive new players onto the bitcoin exchanges to arbitrage with the futures, and it could change the balance of power with price.

But we already know the key details for the contract specs. That's why it being cashed settled is a big deal. If it was physical delivery then the interaction would be different with the bitcoin exchanges. You would maybe even see people leave the exchanges and just trade the future. Instead I'd expect to see a ton of robots come in.

At the same time these issues could just be reasons for the regulators to not approve it.

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  #25 (permalink)
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Bitcoin is so fragmented, and presumably inefficient compared to a mature futures product. So hypothetically speaking, what is going to happen if someone like JPM start selling BTC futures with crazy large size. How will this effective the underlying price at each BTC exchange?

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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  #26 (permalink)
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Looks like 5 bitcoins per contract.

$25 minimum tick.

https://www.google.com/amp/s/amp.businessinsider.com/bitcoin-futures-cme-terms-2017-11
Sent from my iPhone using Tapatalk

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  #27 (permalink)
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https://www.cmegroup.com/trading/bitcoin-futures.html

Contract Specifications

Contract Unit
5 bitcoin, as defined by the CME CF Bitcoin Reference Rate (BRR)

Minimum Price Fluctuation
Outright: $5.00 per bitcoin = $25.00 per contract
Calendar Spread and Basis Trade at Index Close (BTIC): $1.00 per bitcoin = $5.00 per contract

Trading Hours
CME Globex and CME ClearPort: 5:00 p.m. – 4:00 p.m. CT Sunday – Friday
BTIC: 5:00 p.m. - 10:00 a.m. or 11:00 a.m. CT (4:00 p.m. London Time) Sunday - Friday

Product Code
Outright: BTC
BTIC: BTB

Listing Cycle
Nearest 2 months in the March Quarterly cycle (Mar, Jun, Sep, Dec) plus the nearest 2 "serial" months not in the March Quarterly cycle.

Contract months for initial listing:
Dec 2017, Jan 2018, Feb 2018, Mar 2018.

Termination of Trading
Last Day of Trading is the last Friday of contract month.
Trading in expiring futures terminates at 4:00 p.m. London time on Last Day of Trading.

Position Limits
Spot Position Limits are set at 1,000 contracts. A position accountability level of 5,000 contracts will be applied to positions in single months outside the spot month and in all months combined. The reportable level will be 25 contracts.

Block Minimum
5 contracts

Price Limits
Price limits for a given Business Day are made by reference to the most recent Bitcoin Futures settlement price, settled at 4:00 p.m. London time each Business Day.
Special price fluctuation limits equal to 7% above and below prior settlement price and 13% above and below prior settlement price and a price limit of 20% above or below the previous settlement price. Trading will not be permitted outside the 20% above and below prior settlement price.

Settlement
Cash settled by reference to Final Settlement Price, equal to the CME CF Bitcoin Reference Rate (BRR) on Last Day of Trading.

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  #28 (permalink)
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@Devil Man Can you please share the CME link?

Thanks,
Matt Z
Optimus FUtures

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Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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  #29 (permalink)
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Sorry @mattz here it is:

Coming Soon: Bitcoin Futures

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  #30 (permalink)
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mattz View Post
@Devil Man Can you please share the CME link?

Thanks,
Matt Z
Optimus FUtures

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@mattz would you mind giving us your thoughts once you had time to review the specs?

thanks!

Johnny

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