Betting Against Bitcoin With Options

Betting Against Bitcoin With Options

As we all watch the rise and fall of Bitcoin, traders keep asking, How can I short bitcoin? Are there options available for bitcoin?

The answer is yes, you can short bitcoin with put options.

The type of option that is available for shorting or betting on the rise of bitcoin is called a binary option. Basically, it is an all or nothing bet, if you are correct on the direction before expiry, you profit, if not, then you lose. Mostly returns are in the 70% – 74% range depending on the length of the contract and the broker.

Top Option offers hourly binary options on Bitcoin with a return of 60%. Either one of these brokers will allow you to open account with a minimum deposit of $250. The trader can choose the actual size of the option contract. For instance, the trader can select $10 for a potential return of $17 or the trader can bet $100 for a potential return of $170.

As CNN Money recently reported

If you are betting against bitcoins, what you want to do is buy a put option, which is a derivative contract that allows you to sell something at a set price. If the actual price of the thing falls below the set price, or strike price, you make money.

Prices of Bitcoin

The price of bitcoin reached previous all-time high of $1124.76 on November 29th 2013. It was at $13.36 on January 5th 2013. Because Bitcoin change hands on multiple platforms, to see the range of prices head over to Bitcoin Charts. As you can see there are over 10 different prices for bitcoin depending on the exchange.

Bitcoin Price ChartWhen trading options on bitcoin, the only price that matters is the price your option broker uses. Ask your options broker where they get their pricing from. Since Bitcoin is not recognized by typical stock brokers, you will not find Etrade or Ameritrade offering you the ability to trade options on Bitcoin.

Learn more about binary options trading on http://www.binaryex.com

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