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Offline joele

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TIPS: Make some profit while holding BTS
« on: February 04, 2015, 04:08:09 AM »

Hedging, hold bitSilver with 4%/yr yield
1. Go to market, search for BitSILVER:BTS
2. Make a short on bitSilver (set the price limit higher than the buy order and set the interest rate to 0)
3. Immediately buy your short
4. Cover before the exp. date.

Before 30 days cover your short, your BTS will return but with more bitSilver on your fund because of the yield.

Warning:
1. Set the Short price limit higher than the buy order and set the interest rate to 0
2. Immediately buy your Short, because there are bots that are buying lower price  (I recommend to set the price lower on the sell order and other users short order)
3. It required 2x the value to short and 1x to buy your short, so make sure you have enough BTS (3x the value)
4. Don't do this when you're drunk
5. Recommended to bored users who keep staring their BTS balance.
6. Good luck, and remember you are old enough to be responsible for your actions.
« Last Edit: February 04, 2015, 04:27:17 AM by joele »

Offline arhag

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Re: TIPS: Make some profit while holding BTS
« Reply #1 on: February 04, 2015, 04:45:51 AM »
Let's see. Say you have a little over $3,000 worth of BTS, or 300,000 BTS. You use 200,000 BTS to short sell 58.53 BitSilver at the current price feed of 1,708.64 BTS/BitSilver. You use the other 100,000 BTS to buy up your short. This increases the supply from the current 288 BitSilver to 346.53 BitSilver (a 20% increase). The average expected yield metric reported on bitsharesblocks.com drops from the current 3.06% to 2.54%. By the way, while I was typing this the reported yield dropped from 3.41% (since the supply was 258 BitSilver) to 3.06% because of an additional 30 BitSilver added to the supply; it seems like people are taking your advice :).

So, as more people try to get in on this free 3% p.a. yield, they will drive it down low enough that people won't bother. Of course they cannot actual claim the yield that they saw reported when they shorted. The only yield that matters is the one at the time they transfer their asset to themselves. They need to hold the asset for at least 24 hours before they can claim any yield at all. And even then the actual yield is the reported yield multiplied by the factor (0.2 * (1/365)^2 + 0.8 * (1/365)) = 0.00219. So the amount of free money received after 24 hours assuming the supply doesn't further increase (and no one else claims any of the 8.81 BitSilver currently in the yield pool by transfer their existing BitSilver to themselves) is 0.00219 * 0.03 * 58.53 BitSilver = 0.003845 BitSilver, which is currently worth approximately  6.57 BTS or 6.6 cents.

The important question to ask then is do you wait a few more days, d, to increase that factor f(d) = (0.2 * (d/365)^2 + 0.8*(d/365))? Or do you claim your yield as soon as you can before the reported yield drops as the supply increases? Determining the best strategy depends on making assumptions about what people will do in the future (increase/decrease in BitSilver supply, further market orders and transaction fees to increase BitSilver yield pool, BitSilver transfers that claim yield reducing the BitSilver yield pool). So, who knows. But what I wanted to point out is that the yield column in bitsharesblocks.com can be very misleading (especially for BitAssets with a small supply).

Offline Markus

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Re: TIPS: Make some profit while holding BTS
« Reply #2 on: February 04, 2015, 04:46:11 AM »
How do you know BitSilver will yield 4% p.a. over the next 30 days?

Offline joele

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Re: TIPS: Make some profit while holding BTS
« Reply #3 on: February 04, 2015, 05:30:52 AM »
I never say it has fixed 4% yield, traders know it varies.
It's an old hedging technique, instead of holding BTS with no yield, hold bitSilver instead but use hedging to protect the amount of your BTS in price movements.
If you find it not worth it then don't try it, that's why I said you are old enough to be responsible for your actions.

Offline xeroc

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Re: TIPS: Make some profit while holding BTS
« Reply #4 on: February 04, 2015, 07:15:04 AM »
In order to be able to buy your own short .. why not put the buy order first and then the short sell order?
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Offline cass

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Re: TIPS: Make some profit while holding BTS
« Reply #5 on: February 04, 2015, 07:24:15 AM »
Warning:
4. Don't do this when you're drunk

good one Lol  +5%
█║▌║║█  - - -  The quieter you become, the more you are able to hear  - - -  █║▌║║█

Offline joele

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Re: TIPS: Make some profit while holding BTS
« Reply #6 on: February 04, 2015, 07:36:51 AM »
In order to be able to buy your own short .. why not put the buy order first and then the short sell order?

Yes, this is actually a good point while the feed price is less than the buy price.
Otherwise to make sure, short first then buy.

Offline Ander

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Re: TIPS: Make some profit while holding BTS
« Reply #7 on: February 04, 2015, 08:40:21 AM »
Another good way to do this:

Sell some of your BTS, then buy back again later.  Its always lower when you buy back so you make profit!  Worked perfectly for me so far! :D

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Offline liondani

Re: TIPS: Make some profit while holding BTS
« Reply #8 on: February 04, 2015, 09:00:37 AM »
Another good way to do this:

Sell some of your BTS, then buy back again later.  Its always lower when you buy back so you make profit!  Worked perfectly for me so far! :D

#BearMarketJokes
lol

...waiting for the time I can short BTS using bitUSD as a collateral :P

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Offline arhag

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Re: TIPS: Make some profit while holding BTS
« Reply #9 on: February 04, 2015, 09:34:35 AM »
...waiting for the time I can short BTS using bitUSD as a collateral :P

I still find that concept bizarre. I now appreciate the use cases of shorting BitAssets with other BitAssets as collateral, but shorting BTS is just strange to me. Not because the short seller would want to short BTS (I get that), but why would someone want to go long?

I can't imagine the BTS shorted into existence using BitUSD as collateral (which I will call BitBTS) is fungible with real BTS, since it can be liquidated during a black swan into less BTS than its nominal value and I also doubt it would have voting rights. (Actually the idea of black swan happening to a BitAsset held as collateral for a short position of another BitAsset makes my head spin.) So given the fact that I have the option to either purchase BTS or BitBTS, why would I ever choose BitBTS given its disadvantages unless it provided a decent amount of interest.

So, is that the idea? That those who want to short BTS using BitUSD need to provide a decent amount of interest in order to attract BTS longs into holding BitBTS rather than BTS itself?
« Last Edit: February 04, 2015, 09:36:40 AM by arhag »

Offline xeroc

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Re: TIPS: Make some profit while holding BTS
« Reply #10 on: February 04, 2015, 10:04:52 AM »
...waiting for the time I can short BTS using bitUSD as a collateral :P

I still find that concept bizarre. I now appreciate the use cases of shorting BitAssets with other BitAssets as collateral, but shorting BTS is just strange to me. Not because the short seller would want to short BTS (I get that), but why would someone want to go long?

I can't imagine the BTS shorted into existence using BitUSD as collateral (which I will call BitBTS) is fungible with real BTS, since it can be liquidated during a black swan into less BTS than its nominal value and I also doubt it would have voting rights. (Actually the idea of black swan happening to a BitAsset held as collateral for a short position of another BitAsset makes my head spin.) So given the fact that I have the option to either purchase BTS or BitBTS, why would I ever choose BitBTS given its disadvantages unless it provided a decent amount of interest.

So, is that the idea? That those who want to short BTS using BitUSD need to provide a decent amount of interest in order to attract BTS longs into holding BitBTS rather than BTS itself?
I have a recording of BM saying that shorting BTS will certainly never be allowed in BitShares as it breaks the max supply of THE underlying token.
I would be surprised if he changed his mind .. However, I am fine with having the option to short ANY bitAsset with ANY bitAsset as collateral ..
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Offline arhag

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Re: TIPS: Make some profit while holding BTS
« Reply #11 on: February 04, 2015, 10:18:34 AM »
I have a recording of BM saying that shorting BTS will certainly never be allowed in BitShares as it breaks the max supply of THE underlying token.

Eh. First, the effective supply decreases rather than increasing because you always need to lock up more BTS than the BitBTS it ultimately creates. So those fearing inflation should be happy about that. Second, nothing prevents another blockchain from using a similar BitAsset system to "inflate" BTS by shorting BitBTS into existence on their chain. We are effectively inflating "gold" when we produce BitGold. I really don't see what the functional difference is from a price inflation perspective. In fact, they don't even need an asset tracking BTS. Having people simply divest from BTS to another asset outside our blockchain has the same negative effects on value (which is really all those fearing inflation care about). You can't really prevent that; it's a free market.

Offline graffenwalder

Re: TIPS: Make some profit while holding BTS
« Reply #12 on: February 04, 2015, 10:21:26 AM »
...waiting for the time I can short BTS using bitUSD as a collateral :P

I still find that concept bizarre. I now appreciate the use cases of shorting BitAssets with other BitAssets as collateral, but shorting BTS is just strange to me. Not because the short seller would want to short BTS (I get that), but why would someone want to go long?

I can't imagine the BTS shorted into existence using BitUSD as collateral (which I will call BitBTS) is fungible with real BTS, since it can be liquidated during a black swan into less BTS than its nominal value and I also doubt it would have voting rights. (Actually the idea of black swan happening to a BitAsset held as collateral for a short position of another BitAsset makes my head spin.) So given the fact that I have the option to either purchase BTS or BitBTS, why would I ever choose BitBTS given its disadvantages unless it provided a decent amount of interest.

So, is that the idea? That those who want to short BTS using BitUSD need to provide a decent amount of interest in order to attract BTS longs into holding BitBTS rather than BTS itself?
I have a recording of BM saying that shorting BTS will certainly never be allowed in BitShares as it breaks the max supply of THE underlying token.
I would be surprised if he changed his mind .. However, I am fine with having the option to short ANY bitAsset with ANY bitAsset as collateral ..
Let's say someone shorted bitusd against BItBTC.
That would mean the bitusd is backed by 3 times it's BItBTC's worth.
BItBTC is backed by 3 times it's BTS worth.
Now you have bitusd from the BTS:bitusd market with 3xcollateral
And bitusd from the bitusd:BItBTC market with x9 collateral.

Not sure if this would cause a problem, but it's a strange concept.

Offline arhag

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Re: TIPS: Make some profit while holding BTS
« Reply #13 on: February 04, 2015, 10:37:08 AM »
Let's say someone shorted bitusd against BItBTC.
That would mean the bitusd is backed by 3 times it's BItBTC's worth.
BItBTC is backed by 3 times it's BTS worth.
Now you have bitusd from the BTS:bitusd market with 3xcollateral
And bitusd from the bitusd:BItBTC market with x9 collateral.

Not sure if this would cause a problem, but it's a strange concept.

Yes, those two BitUSDs would actually be separate BitAssets that are not fungible.

I've discussed how I would like to see this done here. Essentially anyone could create a BitAsset and each one is unique and not fungible with any other (even if they conceptually track the same underlying asset). Each BitAsset would define an authority slate, price feed definition, margin call limit (there would be no initial collateral requirement other than being larger than the margin call limit), collateral asset type (either BTS or any other BitAsset), name, and description. Majority consensus by the authority slate could modify the name, description, price feed definition, or authority slate of the BitAsset (the collateral asset type and margin call limit could not be mutated after the BitAsset was created). Furthermore, if a majority quorum of both the BitAsset longs and the BitAsset shorts agreed to a new authority slate, the blockchain would replace the authority slate of that BitAsset to that new consensus authority slate. The authority slate could also be set to null or the updating set of top 101 active delegates. The price feed could be defined as the median of the price feeds published by any authority slate for any BitAsset or a mathematical expression dealing only with multiplication and division operations of terms that were either constants or other median price feeds in the blockchain.

Offline ubits

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Re: TIPS: Make some profit while holding BTS
« Reply #14 on: February 05, 2015, 10:01:09 PM »
What are the steps to unwind your shorts?

 

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