RE: When to Buy Bitcoin Now Post-Crash and Why

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When to Buy Bitcoin Now Post-Crash and Why

in bitcoin •  7 years ago  (edited)

cboe futures: http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures
CME futures: http://www.cmegroup.com/trading/equity-index/us-index/bitcoin.html

Note: CME futures had over 1000 contracts for January earlyer, before cboe futures contracts for january ended.

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  ·  7 years ago (edited)

I am not sure if i understood what you meant, but this is how it goes:

1 Contract = 1 Bitcoin (CBOE)

This means that if one person wants to buy one future contract, he must deposit the equivalent value of 1 Bitcoin on the contract (usually through a broker). The same goes for who want that want to a short (sell) contract.

That way, for every 1 BTC contract, there is 2 contract values on the system.

Each buy (long) contract open up a sell (short) contract. Every contract must have 2 sides. One buying and one selling.

This means that if on day 1, one person buy 10 BTC contracts, there is 10 sell (short contracts) positions avaiable (or active contracts).

If on the next day, that 10 BTC (contracts) owner close 2 contracts ("sell" 2 BTC), there is now 8 active contracts.

The amount of contracts active varies between days. At the end of every day, a settlement happens, where the values relative to the contracts exchange hands:

If someone gained +100, someone else lost -100.

At the expiration date all open contracts are settled, and there is no more open contracts to trade, and everyone recieve back the money they have. Then a new cycle restarts.

No one gets any close to one satoshi. Not even the CME or the CBOE.