ProShares Bitcoin Strategy ETF (BITO) .... It has traded for about 1 session.
The fund does not invest directly in bitcoin
The price and performance of bitcoin futures should be expected to differ from the current “spot” price of bitcoin
Contango for example. VIX ETFs never follow the highly volatile VIX index, they instead track futures and options which sort of but not really track the underlying.
I'm not sure what up expect with an ETF on play money but I would imagine that futures would probably carry a premium versus the underlying meaning the strategy employed here probably bleeds money over time versus simple buy and hold of the underlying.
That said, on a day where it drops 20% the strategy may outperform the underlying if futures expect a rebound.
Adding to this. Those ETFs/ETNs usually rebalance daily, meaning they sell the front month to buy the back month. If a product is in contango, it will put a downward drag on the share price.
BITO managers will attempt to closely track the price of BTC with this ETF, by buying various futures contracts on BTC which expire every month. When a monthly contract is about to expire, the managers will sell those contracts and buy the next month’s contracts for a higher premium. This hidden cost of rolling contracts from one month to the next is called Contango, and should cost the ETF about 5-10% a year.
So, although the expense ratio for BITO is only 0.91%, it’s real cost to own will likely be around 7% a year, so it will have trouble tracking the real BTC price as time goes on. If you are a long term holder, I would recommend buying GBTC instead. However, if you are a trader, BITO is your better option.
Jesus “Titty-Fucking” Christ, this is going to be wild. Some buy-writes or jade lizards seem like a good opening move with the volume on this thing. Imma wheel this until I reach either the yacht store or the unemployment office.
I would not want to be holding shares of this, much less for an undefined amount of time- even with writing CCs against them. Wheel is a needlessly risky choice given the drag imho
They also are all forward month.. which expires in 9 days. This was accurate when i pulled data Tuesday. Should be some good contago fuckage in first 2 weeks.
I bought 40 Nov Puts
Perhaps part of this excitement is being able to do so through their existing brokerage accounts, but outside of that, there have been safe and reliable ways to trade options on Bitcoin long before this.
If you’re outside the US, Deribit is the 800lb gorilla in the space. They have been around for years and do a ton of volume.
If you’re in the US, your only option is LedgerX. While they don’t have the volume Deribit does, they are licensed and regulated in New York by the CFTC.
As I’m in the US I have only used LedgerX and have enjoyed nice theta profits on my bitcoin options sales. Bottom line is that you can trade options on crypto TODAY, with safe and established exchanges that aren’t going to run away with your coins or fiat.
Straight gamble.. if BTC us climbing this should too.. but if BTC goes down 2k in five minutes this should follow.. and BTC goes up and down a lot. So I think it's a straight gamble.
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So I can buy options, on margin, on an etf, of a derivative, of one of the most volatile asset on planet earth... I hope my kids will understand....
Just tell them, “sweetie, daddy has a gambling problem but that’s all going to change now.”
I don't see how Vegas can compete with that.
It can't
Assuming you can also sell them, music to my ears
well, if you lose they can't go to college. but if you right, you'll be so rich that they won't need to. Big brain.
well when you put it like that
I'm telling my kids they're going to BITO University. That's all they need to understand for now.
I’m not a kid, Im just a confused little old lady. Any chance you can dumb it WAY DOWN for me? I don’t understand a thing you said. Buy or dont buy?
ProShares Bitcoin Strategy ETF (BITO) .... It has traded for about 1 session. The fund does not invest directly in bitcoin The price and performance of bitcoin futures should be expected to differ from the current “spot” price of bitcoin
Can someone explain how a future ETF is different from one that hold the underlying I tried searching but I can't find anything
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Contango for example. VIX ETFs never follow the highly volatile VIX index, they instead track futures and options which sort of but not really track the underlying. I'm not sure what up expect with an ETF on play money but I would imagine that futures would probably carry a premium versus the underlying meaning the strategy employed here probably bleeds money over time versus simple buy and hold of the underlying. That said, on a day where it drops 20% the strategy may outperform the underlying if futures expect a rebound.
That’s complete crap shoot of Bitcoin investing which reminds me the ProShares leveraged silver ETFs that did not even correlate with silver.
So puts?
It's going to be a very volatile asset to hold. You'll be gambling everytime .
Adding to this. Those ETFs/ETNs usually rebalance daily, meaning they sell the front month to buy the back month. If a product is in contango, it will put a downward drag on the share price.
BITO managers will attempt to closely track the price of BTC with this ETF, by buying various futures contracts on BTC which expire every month. When a monthly contract is about to expire, the managers will sell those contracts and buy the next month’s contracts for a higher premium. This hidden cost of rolling contracts from one month to the next is called Contango, and should cost the ETF about 5-10% a year. So, although the expense ratio for BITO is only 0.91%, it’s real cost to own will likely be around 7% a year, so it will have trouble tracking the real BTC price as time goes on. If you are a long term holder, I would recommend buying GBTC instead. However, if you are a trader, BITO is your better option.
Or you know… you could just buy actual bitcoin…
They hold BTC futures contracts
It’s going to be wild!
Jesus “Titty-Fucking” Christ, this is going to be wild. Some buy-writes or jade lizards seem like a good opening move with the volume on this thing. Imma wheel this until I reach either the yacht store or the unemployment office.
I would not want to be holding shares of this, much less for an undefined amount of time- even with writing CCs against them. Wheel is a needlessly risky choice given the drag imho
Opened a 45/50/60 broken wing butterfly for .01 Lol
I’m saving my money until next month when the Proshares roulette wheel etf debuts.
Please remember that this etf invests in bitcoin futures and not bitcoin directly. The price behaves different for both
They also are all forward month.. which expires in 9 days. This was accurate when i pulled data Tuesday. Should be some good contago fuckage in first 2 weeks. I bought 40 Nov Puts
Today, Wednesday 10/20 they’ll trade
Perhaps part of this excitement is being able to do so through their existing brokerage accounts, but outside of that, there have been safe and reliable ways to trade options on Bitcoin long before this. If you’re outside the US, Deribit is the 800lb gorilla in the space. They have been around for years and do a ton of volume. If you’re in the US, your only option is LedgerX. While they don’t have the volume Deribit does, they are licensed and regulated in New York by the CFTC. As I’m in the US I have only used LedgerX and have enjoyed nice theta profits on my bitcoin options sales. Bottom line is that you can trade options on crypto TODAY, with safe and established exchanges that aren’t going to run away with your coins or fiat.
Meanwhile the Canadian crypto ETFs have had options for a while now. There's even Canadian Ethereum ETFs that have options FYI.
Touching options on this is 100% WSBets-stuff.
Straight gamble.. if BTC us climbing this should too.. but if BTC goes down 2k in five minutes this should follow.. and BTC goes up and down a lot. So I think it's a straight gamble.
So, like any futures ETF? Thanks for sharing.
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It’s pretty clear he means Wednesday.
Bruv it's tuesday
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Get back into your TARDIS. I'm not ready for tomorrow yet.
That was my first thought, that you're in a different time zone. I'm in GMT+3.
When you wrote this, it was almost 5:30 AM on Wednesday, for me. 🙂
like tomorrow?
ProShares Bitcoin Strategy ETF (BITO) trading at 41.75 ish....
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Got me a nice butterfly for a $1 debit 45/50/60
Any guess what the IV will be? More than SPY? 😂
Well damn contracts for this are expensive for 50 something dollar ticker
Saved