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Quote from: JakeThePanda on January 31, 2014, 01:11:02 pmQuote from: toast on January 30, 2014, 09:45:01 pmIf you put in 10 bitUSD, you'll get back 10.5 bitUSD in a year. You're saying that for some reason you expect BitUSD/(USD + premium) to go down in that time as well. But whole point of BitUSD is that the market is supposed to be constantly pushing it back towards the real BitUSD/(USD + premium) by trading value in terms of BTS.If price remains stable, then why would someone go short and pay 5% interest? If I pay 5%, I have to get something in return like volatility.You would only go short if you expect the value of the asset you are shorting to go down relative to BTS. The price remains stable when people are roughly divided about which direction the ratio will go. I think BTS will rise by much more than 5% during the first year, so I would short sell BitUSD.
Quote from: toast on January 30, 2014, 09:45:01 pmIf you put in 10 bitUSD, you'll get back 10.5 bitUSD in a year. You're saying that for some reason you expect BitUSD/(USD + premium) to go down in that time as well. But whole point of BitUSD is that the market is supposed to be constantly pushing it back towards the real BitUSD/(USD + premium) by trading value in terms of BTS.If price remains stable, then why would someone go short and pay 5% interest? If I pay 5%, I have to get something in return like volatility.
If you put in 10 bitUSD, you'll get back 10.5 bitUSD in a year. You're saying that for some reason you expect BitUSD/(USD + premium) to go down in that time as well. But whole point of BitUSD is that the market is supposed to be constantly pushing it back towards the real BitUSD/(USD + premium) by trading value in terms of BTS.
Quote from: Pocket Sand on January 30, 2014, 10:09:33 pmI'm still confused about 2 aspects, first when do you pay the 5% for shorts, after the first year or immediately when you start the long/short agreement, also can either participant exit the long/short deal at any time.5% continuously (APR?)there is a global market for long/short positions
I'm still confused about 2 aspects, first when do you pay the 5% for shorts, after the first year or immediately when you start the long/short agreement, also can either participant exit the long/short deal at any time.
If you put in 10 bitUSD, you'll get back 10.5 bitUSD in a year. You're saying that for some reason you expect BitUSD/(USD + premium) to go down in that time as well. But whole point of BitUSD is that the market is supposed to be constantly pushing it back towards the real BitUSD/(USD + premium) by trading value in terms of BTS.In the case of shitty corporate bonds the company loses value and so you don't get 5%. In the case of BitUSD the short position covers your losses "behind the scenes" out of their collateral.Of course they should be careful with advertising nonetheless
Because these never mature premium when you still is the same as the premium when you buySent from my iPhone using Tapatalk
Quote from: JakeThePanda on January 30, 2014, 09:00:08 pmQuote from: Riverhead on January 30, 2014, 03:43:51 pmQuote from: bytemaster on January 30, 2014, 03:41:51 pmIf you only paid 90 cents for it and the interest rate didn't change then you would only be able to sell your 1.05 BitUSD for $0.945 and thus your return would still be 5%But $0.045 on $0.90 is 10.5%.....I think I'm missing something. If I buy it at 90 cents and wait a year and I have to sell it at 85 cents , now I have a loss of .83%. I may have made 5% in interest but price depreciated by 5.56%. If it acts like a bond then I don't care about the coupon, I care about the total return. In this case my total return was negative. What's missing?Your return was negative because you assumed BitUSD depreciated by 5 cents
Quote from: Riverhead on January 30, 2014, 03:43:51 pmQuote from: bytemaster on January 30, 2014, 03:41:51 pmIf you only paid 90 cents for it and the interest rate didn't change then you would only be able to sell your 1.05 BitUSD for $0.945 and thus your return would still be 5%But $0.045 on $0.90 is 10.5%.....I think I'm missing something. If I buy it at 90 cents and wait a year and I have to sell it at 85 cents , now I have a loss of .83%. I may have made 5% in interest but price depreciated by 5.56%. If it acts like a bond then I don't care about the coupon, I care about the total return. In this case my total return was negative. What's missing?
Quote from: bytemaster on January 30, 2014, 03:41:51 pmIf you only paid 90 cents for it and the interest rate didn't change then you would only be able to sell your 1.05 BitUSD for $0.945 and thus your return would still be 5%But $0.045 on $0.90 is 10.5%.....
If you only paid 90 cents for it and the interest rate didn't change then you would only be able to sell your 1.05 BitUSD for $0.945 and thus your return would still be 5%