Quote from: Super T on June 07, 2014, 05:47:24 AM

Quote from: thetedderbear on June 04, 2014, 11:21:29 PM

So say I'm selling a contract for 1BTC for $700, instrument 6.14. So if I'm correct, on June 14, 2014, the buyer of my contract will not pay me USD (since everything is in BTC), but in BTC.

When you sell 1 contract, you are not selling 1 BTC, you are selling $10 of BTC (at the price specified).

So if you want to create a position equivalent to -1 BTC, and the current trading price is 700, you need to sell 70 contracts (70 x 10 = 700, give or take a little for fees etc).

You then have a floating position of $700 worth of bitcoin, against which you will accumulate profit or loss, if the price halves and $700 buys twice as much bitcoin at expiry, then you will pocket the difference (in bitcoin).

You will see yet net value of your position fluctuate on a daily basis as the ICBIT price for that instrument fluctuates. If you hold to contract expiry you will see the ICBIT price converge with the settlement spot price (e.g. Bitstamp) in the weeks/days before settlement.

Make sense? If not the best way to learn is just buy sell 1 or 2 contracts and see what happens, you'll soon get a feel for it.

Thanks for this, I just now read it and I've finally wrapped my head around it a little better. Made myself a spreadsheet in excel that helped me visualize it all.

A few more questions:

This is probably really stupid but I would rather know for sure than not. So the orderbook displays currently open orders, so "Buy" orders listed there are open buy's from other users, to whom I could sell contracts? Or do I have it backwards.

Also, so given that a Buy order is listed there, ex. 250 contracts with a price of 660. Given that I understand my above question correctly and that is in fact an order I can sell to, would I have to sell 250 contracts at 660 to match up with that one? Or if I only sold 150, would it execute for me and only partially execute the other users order, leaving him or her with an open order of 100 contracts at 660?

Thanks in advance guys!