You are viewing a single comment's thread from:
RE: Just got done watching CNBC's Fast Money, and one thing in particular stuck out...
Hello and thanks @jrcornel. Could you write a follow-up educational post and give us some lessons on how that 2.5 billion might be deployed, since in my understanding (fallible no doubt) hedge fund strategies usually involved going in on two or more positions in such a way that there is one set of positions that are likely to lose while the other set is likely to gain; but the relative sizes of the two sides and timing are such that it is expected that at the end of the day there would be a net gain. (Of course, taking some short positions might be involved, as well as simultaneously taking positions in other markets.)
So I am asking myself whether that all 2.5 billion is going to the long side, and if it's all going
to the long side how is a hedge going to be set up?
I know that with your long experience you can help us with a “quick course”.
Thanks in advance.
Haha yes that would be enough info to fill a post indeed! I can't really say for sure how they might deploy it other than the snipits I have heard Mike say in the past. He said he plans on deploying all around the industry, more than just coins. Said he plans on investing in miners, exchanges, and also coins.
Then, like you said, will he take the short side to also hedge some of his bets? Probably.
That might be why he has waited until now to launch his fund. He needed futures and options up and running so he could hedge his long plays.
Most likely he picks a core group of coins, buys positions and then buys a couple longer term puts on them for much less money to protect against a sharp downturn. He could also sell some calls against that position to fund those puts. That would be my guess anyways.
Other than that, you'd have to ask him. :)
Very interesting, and thanks @jrcornel. I am just now hearing a chat between Tone Vays and Richard Heart where they get into the nitty-gritty of how short positions could be maintained.
The upshot seems to be that only the guys with enough underlying to hand over if their position blows up are reasonably protected from serious wipe-out when shorts go bad. The brokers are setting scary margins on short positions.
They seem to agree that some of the recent price run-up is from the Big Boys loading up on the protective collateral they want to have on hand when they go short.
You are making some interesting comments about puts. Is CBOE going to set up option trading?
Check out the Vays-Heart chat. One take-away for me is that most of the hedging will involve taking off-setting positions in related markets, rather than heavy-duty shorting of BTC.
Cheers!
BTW -- I am unable to stop marveling at these millionaires/billionaires in the game fighting hard as if the need to make money. Something has gone wrong with humanity, from where I sit.