Hi, I just came across this, looks intriguing, I've been thinking about getting into option trading for some time although to be honest I don't know THAT much about it yet, so ... just to get an idea:

Do you think I would be able to use this app if I have little to no knowledge about options trading, or would you advise me to take an Options Trading crash course first?

and another question that comes to mind:

In what way is options trading on a block chain platform like Stellar different from 'classical' options trading (with regular money that is) - pros, cons?

    John
    Yes indeed. It's plain HTML / jquery. We haven't spent any time on the UI yet. I'm a command-line guy 🙂

    • John replied to this.

        leob Do you think I would be able to use this app if I have little to no knowledge about options trading, or would you advise me to take an Options Trading crash course first?

        Options in general aren't hard. They get complex when you get into advanced strategies like straddles, strangles, iron condors, and other strange names. That doesn't really apply here since we're only doing single call options. Put options are in the roadmap. Once those are implemented, complex strategies can be considered, but for now they aren't on the roadmap.

        leob In what way is options trading on a block chain platform like Stellar different from 'classical' options trading (with regular money that is) - pros, cons?

        I'd say the main difference is who's in control of the funds at any given time. Just like any of the SDEX sites (stellarx, stellarport, etc.), those entities don't actually control any of your assets. They're essentially front-ends to the publicly available data in the stellar network. That the basic idea for this also, with some additional complexity built in to allow for escrow accounts and option market creation.
        The "con" to such a design might be the same as the "pro." Since the site doesn't actually control your funds, it has limited ability to fix any mistakes that you make, like sending deposits to the wrong address or fat-fingering a trade. But this is true with all of the stellar trading sites.

            ddombrowsky
            It was better you could complete the program and participate in the next round because we could test your team's creativity in design and user experience.

                John
                Thank you for your feedback. To your point, I'm hoping that the community will judge the project on the merits of the idea (that is, a mostly trust-less way of buying, selling, and exercising options), and not the user interface.

                  I've gotten some questions regarding the "trustless" aspect of the options exchange. I want to clarify a few things:

                  1. As is standard operating procedure for any sdex front end, no private key is required for the wallet. Transactions submitted to the network are signed locally, probably using something like Stellar Authenticator or something similar.

                  2. Regarding the escrow accounts: since these options are "American" style, the funds at any time may be moved out of the account and exchanged for the base asset, according to the contract. This means a few things:

                    a) the user cannot be the only signer on the escrow account. The system must be a signer and the signing weight required must be at least 2.


                    b) the user must submit a pre-signed transaction containing an OTC trade with a system account, according to the amount specified in the contract (e.g. 1 BTC for 160000 XLM).

                  3. If an option is exercised, the transction in step 2b is signed and submitted by the system, simultaneously with the other end doing the same thing in reverse (e.g. 160000 XLM for 1 BTC, exchanged with a system account). This way the system is never holding funds and being trusted to do the right thing when the time comes.

                  Another question I've received:

                  • I'm concerned that the options are issued by the system, and not by known anchors.

                  There are 2 answers to that:

                  1. A possible business model is that the entity running the site can make money charging fees on withdrawals, similar to how anchors work. This would require that users trust the assets issued by the system.
                  2. In the initial version, I simply didn't create contracts priced in any asset that the system didn't issue.
                    There's no technical reason they can't be option contracts on BTC issued by apay.io, for example.

                  Could someone share some resources where I could learn more about option? That project seems well-thought but leaves me a bit clueless (^.^)'

                    MisterTicot
                    Investopedia gives an overview: https://www.investopedia.com/terms/o/option.asp
                    This system only implements "call" options at the moment, though there is no technical reason preventing "put" options also (it's on the roadmap). Also, the multiplier for most of the contracts is simply 1, since very very few mortals can afford to buy 100 BTC at any given time.
                    I also give a couple "How you can profit" examples in https://trade.6thstreetradio.org/about.html .

                      11 days later

                      Another thing to consider: this project will use https://stellar-authenticator.org/ for client-side transaction signing, which means not only will this project grow the current stellar ecosystem to include decentralized derivative contracts, it will also support a project in which the SDF has invested in the recent past.

                        You mention decentralized a lot but is it really? Something still needs to run the contracts right. Stellar doesn't have something like a EVM. You mention the word "system" a lot in your post like this system has to assign the options and move funds. But it sounds like this "system" is a centralized service you run?

                          tmacshaq Thank you for your question.

                          tmacshaq You mention decentralized a lot but is it really? Something still needs to run the contracts right. Stellar doesn't have something like a EVM.

                          That is an excellent question. It is "decentralized" in the sense that

                          • a) Contracts can be traded on the open SDEX market
                          • b) whoever is running the site does not need to hold private keys for any accounts, either user's wallets or the escrow accounts

                          However, in order to execute "american" style contracts (which can be exercised at any time), the "system" needs to have signing power on the escrow account. There is a timed, signed transaction that removes this signing power on contract expiration, so the user retains full control over the escrow account after the contract has expired.
                          No one needs to "run" the contracts, since american style options are exercised by the buyer. It's true that many exchanges will automatically exercise in-the-money contracts right before the expiration. We haven't decided whether or not to implement this feature, or to always leave it up to the buyer.

                          tmacshaq You mention the word "system" a lot in your post like this system has to assign the options and move funds. But it sounds like this "system" is a centralized service you run?

                          We used the word "system" as a shorthand for "whoever is running the site." If we receive SDF funding, then the project will be open source and anyone will be able to run and options trading site, generating contracts for whatever pair and time period they wish.

                                24 days later

                                Thank you do everyone who voted.
                                I hope that all the projects that received funding will use it for the benefit of the community. As for us, we will switch back to a revenue-generating model.