Investment ideas and observations about the real markets we know and love.
Selling into a frothy futures market one month ago has enabled some Bitcoin investors to take home an extra 14% in Bitcoin terms, while facing risk largely limited to the counterparty risk of the exchange itself.
Why would the Bitcoin markets permit a simple forex investment strategy to remain persistently profitable even in the face of quite outlandish changes in the value of Bitcoin versus the dollar? There are at least two possibilities: either the market is inefficient, or the market doesn’t think very highly of the futures exchange involved.
Front month equity options make me nervous. For investors with anything but nerves of steel — or a willingness to gamble away their premium — the closer expiry looms for in-the-money options, the more pressing the decision becomes as to when to close the position. Case in point: those QQQ calls which have now risen by nearly twenty times since April.
Fortune‘s recent piece on betting against the Bitcoin “megabubble” reflected poorly both on the Bitcoin financial markets and on the mainstream financial press. Here’s how to short Bitcoin the right way.
Recent defaults by high profile debtors in the Bitcoin economy serve as a stark reminder that promises of exceptionally high yields on Bitcoin-denominated debt do not represent the “going rate” or remotely plausible yield expectations for debt or other Bitcoin investments; they represent nothing more than the risk premium for low-quality debt.
As I mentioned previously, entering a calendar spread provides one way of protecting gains in a long call position which has appreciated. Under the right circumstances, this can work well as a hedge against a fall in the underlying entity, but sometimes it’s worth simply taking some profit and making some or all of the gains permanent.
Tesla’s earnings report last night has now pushed the common stock over $150, netting a 30% gain in just 47 days for investors who recently wrote September puts at the 90 strike.
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