How Bitcoin Derivatives Work with Juthica Chou

 
 
WBD366 - Juthica Chou - Large Banner.png

Where to find the show

Download Episode MP3 File
The file will open in a new window. Click down arrow to download the file.

“You need to be able to withstand the fluctuations because one of the biggest dangers of leverage is you get closed out at precisely the wrong time...if you’re short and bitcoin rips up you get closed out.”
— Juthica Chou

SHOW DESCRIPTION

Location: Remotely
Date: Tuesday 22nd June
Project: Kraken
Role: Head of OTC Options Trading

Derivatives are contracts that allow traders to take a position with an asset based on possible outcomes; while they can provide dramatic rewards, they come with risk.

Derivative exchanges have been a growing part of the maturing bitcoin ecosystem. However, with the rise of exchanges like FTX and Binance, offering high leverage, there is an increasing lens on these exchanges. 

Derivative contracts are a valuable tool for experienced traders. With exchanges offering leverage of up to 125x, inexperienced traders can quickly amass significant losses.

Whenever bitcoin has a sharp move in either direction, those on the wrong side of the trade often get liquidated. These capitulation events regularly wipe out hundreds of millions or even billions of dollars in positions. 

Some people suggest that high amounts of leverage are detrimental to the price discovery of bitcoin, but it's clear from the rise of certain exchanges that these are the types of markets traders want. 

In this interview, I talk to Juthica Chou,  Head of OTC Options Trading at Kraken. We discuss how bitcoin derivatives work, the different types of contracts, and Microstrategy's leverage plays.

TIMESTAMPS

00:05:24: Introductions
00:06:27: MicroStrategy's bond sale
00:09:29: Risks for retail investors
00:13:25: Surviving your four years of investment
00:15:04: Using leverage
00:16:50: Derivatives explained
00:17:53: Futures explained
00:25:12: When to use futures
00:26:59: Losing on the trade
00:29:39: Stop hunting explained
00:31:23: Bitcoin volatility
00:34:12: Market signalling
00:35:23: Puts explained
00:41:58: Perpetual swaps
00:49:10: Shorting
00:50:08: Implications of derivatives on the market
00:53:15: Individual risks of derivatives
00:56:19: Bitcoin, the 24/7/365 marketplace
00:58:17: Regulations
01:02:14: Juthica's Kraken news!
01:03:13: Final comments

 

SUPPORT THE SHOW

If you enjoy The What Bitcoin Did Podcast you can help support the show by doing the following:

If you are interested in sponsoring the show, you can read more about that here or please feel free to drop me an email to discuss options.

SPONSORS

 
 
 
 
 
 
 
 
 

SHOW NOTES

PodcastPeter McCormack