Should I manipulate the price of the TH1 contract and increase its price to 2 BTC and the suck dry the people stupid enough to short it (by offering them swap at one interest rate for the next 30 days, and then doubling or tripling it for the last 30 days)? Or is Bitfinex going to take action and reverse trades on this badly constructed contract.
I don't think they are going to take action. There isn't enough swap or asks to support all the contracts running out on Wednesday. The smart thing to do is to use this knowledge to your advantage. Even if you don't, it seems someone has planned this for a couple weeks now and the short squeeze will happen anyway.