What difficulty futures should I purchase to maximize the mining income?
where are these offered?
You can find one here -
https://btct.co/security/CB.IDIFF-OThis is a difficulty future for an even month (the -O) expiring on the third wednesday in the month.
The "
O" futures are for
Odd months, not even ones.
If you own mining units / orders for mining units / shares in mining bonds / shares in mining farms then the higher the future difficulty, the less you will earn from your units/shares/bonds/etc - so you hedge this investment by
purchasing mining futures - this will only protect you, however, if the difficulty rises higher than the price you paid for the futures contract. You can also purchase a futures contract simply as a speculator - if you feel the difficulty reflected in the price of the contract is lower than what will be reached by the settlement date.
You sell a futures contract when you believe that mining difficulty will
not rise above the current price of the futures contract, or above the price you can get for a futures contract.
Take the September contract (the current -O issue).
If you believe that
Assume, I believe I'll have miners in hand on October 1 and difficulty will increase linearly at 25%.
specifies my parameters. Thus, I wish to protect myself against either a) difficulty increasing because I haven't received the miners before October 1; or b) the difficulty increases beyond 25%.
Then this is akin to saying that there will be approximately 5.47 difficulty adjustments between now and 18 September 2013 (25% growth per period = 7.5 days per period = 41 days (til 9/18) / 7.5days and that difficulty on 9/18/2013 will be approximately 114,113,665 as of the fifth of those adjustments (do I have you right? difficulty will increase by 25% each cycle?).
Based on this model, you should definitely buy the futures contracts at any price up to
BTC0.01, as they will automatically settle at
BTC0.01 per contract early (on or around 14 September 2013) - if I have your model correct - both to hedge your mining investment and also because your model says there's a solid 10-20% ROI available on the market price of these futures (currently in the 0.008 - 0.009 range)