How Bitcoin Derivatives Work with Juthica Chou
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How Bitcoin Derivatives Work with Juthica Chou - WBD366
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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.
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
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