I can't see directly tho how you recreate a european option from an MPA.
Let's say I want an Option on Bitcoin @ 15000$ at maturity 31/01/2018.
I had in mind a price feed like this:
if today <= maturity (31/01/2018) then
price_feed = max(bitcoin_price_in_usd - 15000, 0)
else
price_feed = 0
At MPA issuance I will:
- put bitUSD as collateral (but it will work also with BTS, or bitBTC if I adjust the rate of the feed).
- put a feed publication rate of one hour, but any rate will work,
- put a short delay for force settlement like 1 minute.
Anyone will be able to borrow and sell the Option on Bitcoin@15000$ to the price (aka strike) they feel right (using their prefered pricing model).
If I buy this option I will be able to take some profit if the Bitcoin price goes higher than 15000$ before the maturity. Afterwards it will be valueless.
This will enable leverage trading, and hedging.
I suppose there are various issues when the price_feed = 0 that will make this solution invalid.
One of those is that anyone can borrow the option without any collateral, a fix could be to set a minimum collateral value.
A similar setup could be done for futures, but we need to avoid any settlement before maturity, and force settle all the futures at maturity.
Do you think somethink like this makes sense and could work?