Hi,
I'm thinking of building a smart contract that executes BTCUSD put/call options. Anyone interested in the concept?
It would an example put option would work would be:
- I want to sell a put option. Therefore I freeze a certain amount of BTC/ether within the contract.
- The person who wants to buy the option, pays the price I want to the contract
- Upon the contract expiration, the contract pays off some of the frozen BTC to the buyer, sends the rest & purchase price to the seller.
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I'm working on some documents at the moment to try and consolidate my ideas about this subject. I'll let you and the forum know when I have them.
Something I am playing with is the idea of bounded options where rather than a strike price, you have a strike range (from strike, to strike).
This dispenses with the inequality between buy side and sell side, and means that limitation of risk and leverage are available to both buyers and sellers of options irrespective of the size of their bank. It means you won't need to tie up so much cash to trade.
I also have many ideas on eliminating front running and latency arbitrage.
I think you could possibly get around this by creating a DAO that's only function is to own $X of a basket of securities. You could then create a currency that's representative of the DAO's holdings, and use that new currency to peg BTC value.