Thread by @duganist

Newcoiners:

1) you have enough fiat from your career/business to buy in a HODL stake like 0.1337 BTC or more (currently almost 7k USD)

2) you risk your $1000 accumulated over years of savings buying 6x lvg. futures - can lose on a pullback

3) Call spreads

Here's the problem:

0.1 min. size on Deribit means you have to shell out fully $400 to buy 1 contract ATM for March.

That's not an advisable bet unless you're planning on catching a move fast - theta is very high - higher than many people's daily wage.

Need 25k to get portfolio margin on Deribit.

Maybe they lower that back to 0.1 BTC so it's like it was in 2019. Still more than people have. Deribit's margining system will close out a further out-of-the-money sold call with liquidation because the profits of the more expensive call don't settle as realized until sold.

Vertical spreads (ideally bigger and of a longer-duration) are probably the best way for people to risk a hundred bucks to make 2k and then hold that BTC until it's 5-10k. You can go to sleep with that position. The theta and vega exposure isn't too bad.

I'm looking at Bit. com

They have the same PM requirement and I assume similar margining rules where you pretty much need PM to do Verticals. Yet Robinhood or any US stock broker would let a cleared customer buy a naked option or sell an equal amount of further-out contracts; simple - margin = debit.

Delta Exchange is another one that is actively courting lower-income retail users to educate them on using derivatives intelligently. They have an easy lay-up here to do simple Verticals margining for retail.

Bit and Deribit use 0.1 min-size - Delta should do 0.01 min-size.

I notice the bid/ask on ATM March options is 4 ticks wider on Bit - because it's hard to MM these things - gets complicated - easy MM solution is quote wider and book after-fee profit by fast cross-arb. Not totally compelling though. Being short Vega/Gamma in this bull is tough.

Basically to succeed in options MM you need 5x the capital and the best option heads on your desk. Also Bitcoin is probably an asset where options pricing is systematically wrong because of stuff BitcoinTINA says. Ergo 0.01 min-size is hard because you can't cleanly arb it.

Usually buying or selling options is a suckers game and it's more about losing some profit to hedge risk managing decent sized stock - Bitcoin is exceptional in its volatility hence my reco that new users try this - but by that same token it's hard for MMs to not lose out.

But if an exchange were willing to rebate and make it worth their while - MMs could deal with some slight fractional -gamma exposure.

I do believe 6-9 month vertical call spreads are the best leverage product for new retail users to semi-HODL.

@pankaj_delta_ex @Delta_Exchange