BetaExoticBets

NotQuiteRandom

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Anyone else testing this out? I am amazed at this, I am trading the funkyest of bets on here which I have optimised and set all the parameters for myself. This is control I have not got from institutional platforms.

I wish I had started it earlier and bought a lookback on the Yen.

I'm certainly going to open an account with them when they let me. I can see credit card logos but it seems to be beta testing only right now. Does anyone have a real account or is it just beta?

Hahahaha, just won a 40 to 1 bet! Fake money though. This is so volatile.

NQR
 
No volatility in the fx markets at the moment. I am now long a few time switch (in) ranges. No point doing any more long volatility bets until it picks up again.

Their binary bets (at the money) are neither long nor short vol (strictly speaking they are short as you get paid if it expires on the strike).

This is some dynamic trading.

The company behind it just emailed me a feedback form... anyone else get this? Not sure which bet type to rank N0. 1 - probably the lookback...?

NQR
 
It seems interesting. Reminiscent more of betonmarkets than binarybet. I'm going to try it today and then give feedback. Does anyone think they really hedge the bets?
 
I was thinking about this having worked a lot on algorithms to hedge their residual overhang from a semi-matched book for exotics (a research project for a spreadbetting company back in 2003).

It is easy for them to hedge the Lookbacks (which are by far the most interesting) and the longer term binary / Time Switch / Touches.

The short term binary risk is tough to replicate dynamically, especially with 10 minute bets. For the FX bets it can be done as the interbank FX options market is so liquid. For stocks and indices it is really hard. I guess that is why they only offer intraday bets on FX (except the Trend Multipliers).

The issue here is not one of hedging every bet - you don't need to, rather it is about hedging the residual risk of the aggregate book of bets. Managing the delta, gamma, theta and vega (rho is not an issue for these purposes) at the individual asset level is more expensive than possible correlation hedges which would make the whole process have a larger variance for them but be cheaper. This is the cost / accuracy hedge trade off that all OTC guys have to contend with.

My view is that they do hedge, but probably not 100%. I think that the implied forward volatility in the Time Switches is probably allowed to go naked (that is how I would do it) and the Trend Multipliers make no sense to hedge (mathematically).

I have to say that BetaExoticBets.com is by far the coolest trading platform for retail traders out there. I can't wait until they go live. My only irritation is that my wife is now beating me on the leader board by a factor of 7!

One more thing... I emailed them to check that I hadn't made some massive faux pax by posting my site access password on this forum. They said it was fine so I guess it is access for all at T2W!

Seems like the site was non-functional for repair this morning ;-( back up now though.

See you on the leader board...


NQR
 
fibonelli said:
A very wide range of binaries.

Fibonelli, you very right. I say infinite. It has many strike as you want and put maturity easily to suit you. This make infinite many combinations. Sometimes difficult to decide.
 
I'm number 2 on the leaderboard now... Just made a packet on EUR/NOK Lookbacks after the rate rise...

I had a Lookback straddle on... Lost on the calls, made a killing on the puts.
 
Apologies, what's the URL?

NotQuiteRandom said:
Anyone else testing this out? I am amazed at this, I am trading the funkyest of bets on here which I have optimised and set all the parameters for myself. This is control I have not got from institutional platforms.

I wish I had started it earlier and bought a lookback on the Yen.

I'm certainly going to open an account with them when they let me. I can see credit card logos but it seems to be beta testing only right now. Does anyone have a real account or is it just beta?

Hahahaha, just won a 40 to 1 bet! Fake money though. This is so volatile.

NQR
 
Not very impressed by betaexoticbets so far. Seems like a more colourful version of betonmarkets. The minimum bet length on indices seems to be 10 hours, except for Trend Multiplier and Time Switch. I can't understand why there are no close of market bets, or range bets a la binarybet. I can see a lot of people trying this site, getting their fingers burned, and then backing off pronto. I've sent an e-mail asking if they intend offering intra day bets on the indices, i.e. market up or down at 12.00 and 16.30 for the FTSE, or closing ranges. But no reply so far. I think they're using testers to fine-tune it in their direction. Be interesting to see what the live version is like, though. Also be interesting to know who is behind the site - I haven't been able to find out anything, so far.
 
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I agree, they should offer shorter term index bets, 10 hours is quite long. Did you email them about this or should I? The FX bets are the best I have seen though with the lowest minimum expiry and most innovative design - as I said before, I have dealt exotics institutionally and this is a very impressive offering to the retail market.

The leader board (which seems to be removed from your post by the forum admin) shows a net very profitable game for the traders testing it. If they hedge, as their last email to me explains, this is sustainable (I am number 2 right now so not feeling the burned fingers concern).

My impression of the platform is very positive but I think the minimum expiry time for index bets should be changed.

Do they do any commodity stuff? I couldn't see it, if not this is another suggestion that should be made along with intraday index bets. Let me know if you have already suggested these. I have already emailed them 7 times in 3 days with ideas for new bet types etc.
 
If you get any further with your questions I would be very interested to learn if they intend to offer the equivalent of Betonmarkets bull/bear bets. Do you happen to know who is behind the development of the site?
 
I have e-mailed them about shorter term index and close of market bets, but no reply as yet. So far as I can see the FX bets are the only ones worth considering at the moment.
 
I agree. The FX ones are fantastic and if they had the same for the index bets it would be great. Lets see what they come back with.

I made some big $ on the GBP/JPY move late this morning with a 15 min Lookback - see me on the leaderboard ;-) Edging up!
 
LOOKBACK BET
Win and lock in $10 for every point that UK 100 Index raises above a strike price of 6256 in the next 8 market hours.
COST
$604.98
FTSE Presently at 6256
In order to cover your bet and make $10 profit the FTSE will have to hit 6316 in the next 8 hours. To make a decent profit, say $100, the FTSE will have to go to 6346.

ONE TOUCH BET
Win $100 as soon as UK 100 Index touches 6306 any time in the next 8 market hours.
COST
$79.68

Can this be for real? I'm going to risk $604.98 on the FTSE going to 6326 when I can get $20.32 for $79.68 if it goes to 6306? Can anyone explain these prices? I'm assuming that the stake money is included in the winnings. Otherwise, I will have to think again.
 
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Posted by riwf

" ONE TOUCH BET
Win $100 as soon as UK 100 Index touches 6306 any time in the next 8 market hours.
COST
$79.68 "


That's at least a 6-1 shot by my data and that's being kind and you get 1.25 - 1 in return. Can't stop laughing. You need to check those odds carefully people.


klw
 
I just priced the same one and make it $37 where 8 market hours expires on Monday, January 29 at 3:12:00 PM. Maybe they have some kind of matched book / risk adjusted pricing thing?

I also got a much lower price on the FTSE Lookback mentioned above, I made it just (1.14%) below fair value which would also imply the matched book theory.

Check out the Lookback I placed yesterday:

"Lookback paying $20.0 FOR EVERY POINT that GBP/JPY ever rises above 238.38 with expiry of 15 minutes." Paid $150.11 for it, when all the volatility kicked off and it expired at $1,280.00.

These are good for when the market just goes nuts - I have had the most success with them taking a contrarian approach and buying them OTM when a FX pair moves very fast one way.
 
Riwf


"I'm assuming that the stake money is included in the winnings. Otherwise, I will have to think again."

No it's not.

Put your stake money in and that's it. Gone. Any profit you make is minus your stake money.

This is exotic options trading simplified and brought to the masses.

I posted something on their google groups this morning (sat) that may interest you, if you care to take a look.

The head trader there is a guy called John Ansbacher, who's name rings a bell in the back of my head somewhere, a big institution is clanging away I think. Don't know as yet who are the firm behind it all.

If you are not in the group thing and do not intend to be I can always paste the post and Johns' feed back on here for you.

Regards.
 
Oh what the hell, I'll post it here anyway.

Comments anyone?

On Jan 27, 12:04 pm, [email protected] wrote:
> Well the first week is over and all became clear a few days into it.
> At first I thought you were another fixed odds betting company or
> bookmaker. This despite your name (and mine come to that), I just
> thought yours was a catchy title.
>
> So congratulations on simplifying? exotic option trading.
>
> Options trading even in a simplified form is hard to judge even for a
> competent trader from say stocks or indices. Mainly because they fail
> to understand the mechanics of it. More importantly they fail to
> understand the dreaded 'Time Decay' factor.
>
> Which brings me to my first point, in being options are one of the
> only trading vechicles in which you can win a trade, bet etc (call it
> what you wish) and you end up losing money on that trade. (Reference
> my first post). You can even win the trade and then be in a negative
> amount from your starting money. So in effect you actually lose money.
> I purposely traded 2 times this way to see if I could provide an
> illustration. (Last 2 trades of pasted account history) Bit hard to
> follow since it doesn't paste properly.
>
> I haven't traded all your instruments but is the time decay present in
> all of them? I would tend to think they are.
>
> To all the traders that read this and do not understand the time decay
> of which I refer to.
> If you choose for instance a lookback bet at a very slow market
> movement time, lunch time, late evening etc. Your price for whatever
> you are trading will hover up and down by a couple of ticks/pips etc,
> essentially going nowhere. Now the time decay factored into the trade
> is working away all the time so your profit is being eroded with each
> minute the bet is in force. You can get this to work in your favour
> but you must choose the correct trade to begin with.
>
> The 2nd major thing that will confuse people is the stake.And this is
> the 2nd area where the site will fall down. If I put 500 pound on a
> horse at a bookmakers and the horse comes in last I wave goodbye to
> the 500 pounds. If it wins I collect my winnings. The price the bet
> was for the horse plus my 500 stake money back
>
> Fixed odds bookmakers You do not wave your stake money goodbye if you
> win.
> Spreadbetting company. You do not wave your stake goodbye. Lets take
> the first example trade underneath here. 20 dollars a point for every
> point that market fell from 1.9711 to 1.9626 = 85 points. To place the
> bet cost me 1,267.19 The bet made 85x20 = 1,700. Take the stake from
> this and that leaves my profit at 432.81
>
> The same trade with a spreadbetting company would have meant having a
> ntr (nominial trade requirement) of x amount. They all vary slightly.
> Lets say there was 20,000 at balance. 85x20 =
> 1,700. This would have been the profit credited to my account. No loss
> of stake!
>
> Given these two major factors why should people use your site to trade
> with. (This is not to "knock" you). But other people will point this
> out and this is simply the feedback you asked for, and a chance to
> state why people should use you. I know I have used options in the
> past to hedge a position in stocks or on the majors and this could be
> a convenient way to do this.
>
> You are to be applauded for lowering the barriers to options trading
> and this can only be a good thing.But for your site to be one of the
> best you have to have better options (No pun intended) then the others
> offer and barring what I have just said your site falls down on 2
> further major points that will see a lack of signups and client
> retention until these are redressed.
>
> Apologies for the lengthy post but the weekend are the only real
> chance to go into any depth. After all I do have a living to make
> during the week. Oh! and to anyone who is interested there will
> shortly be a major market move upon us. Ride this trend and it will be
> a good year. Keep your eyes open!
>
> Look at the figures at the end of the trading history.
>
> 25/01/07 12:01 Lookback paying $20.0 FOR EVERY POINT that GBP/USD
> ever falls below 1.9711 with expiry of 15 hours. 1,267.19
> 1,700.00 432.81 1.9714 EXPIRED 1185541
> 1.9626
> 26/01/07 6:12
>
> 26/01/07 14:52 Lookback paying $10.0 FOR EVERY POINT that GBP/USD
> ever falls below 1.9585 with expiry of 15 minutes. 73.05 240.00
> 166.95 1.9582 EXPIRED 1186120
> 1.9561
> 26/01/07 15:08
>
> 26/01/07 10:40 Lookback paying $9.0 FOR EVERY POINT that GBP/USD ever
> falls below 1.9615 with expiry of 15 minutes. 29.35 126.00 96.65
> 1.9621 EXPIRED 1185905
> 1.9601
> 26/01/07 10:56
>
> 26/01/07 15:25 Lookback paying $10.0 FOR EVERY POINT that GBP/USD
> ever rises above 1.9589 with expiry of 15 minutes. 34.72 100.00
> 65.28 1.9588 EXPIRED 1186124
> 1.9599
> 26/01/07 15:41
>
> 26/01/07 15:59 Lookback paying $10.0 FOR EVERY POINT that GBP/USD
> ever rises above 1.9593 with expiry of 15 minutes. 64.59 110.00
> 45.41 1.9595 EXPIRED 1186127
> 1.9604
> 26/01/07 16:15
>
> 26/01/07 11:07 Lookback paying $1.0 FOR EVERY POINT that GBP/USD ever
> falls below 1.9603 with expiry of 15 minutes. 3.89 6.00 2.11
> 1.9608 EXPIRED 1185960
> 1.9597
> 26/01/07 11:23
>
> 26/01/07 15:14 Lookback paying $10.0 FOR EVERY POINT that GBP/USD
> ever falls below 1.9574 with expiry of 15 minutes. 103.62 100.00
> -3.62 1.9568 EXPIRED 1186122
> 1.9564
> 26/01/07 15:30
>
> 26/01/07 15:42 Lookback paying $10.0 FOR EVERY POINT that GBP/USD
> ever rises above 1.9589 with expiry of 15 minutes. 105.39 70.00
> -35.39 1.9595 EXPIRED 1186126
> 1.9596
> 26/01/07 15:58
>
> $ 1,681.80 2,452.00 770.20
>
> So my actual account has grown by only 770.20 when the actual profit
> should have been 2,452.00
>
> I last thing. The leader board in percentages means people can
> increase their balance by a nominal amount and be top while someone
> else can rack up huge profits and be placed further down the field.
>
> Kind regards.
>
> John D.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
John,

Your in-depth analysis is very welcome and appreciated. Thank you.

I do not think that one can really compare Lookbacks with spread
betting any more than one would compare the latter with vanilla
options.

Your example is correct only under this very broad assumption: a
spread-bettor always exits at the top or the bottom (depending on
whether they are short or long). I hope from your experience you will
agree that this is a very difficult thing to accomplish and if
everyone could do it we would all be very rich.

The Lookback *guarantees* you the top or bottom. For that you pay the
stake. In essence it is a bet on volatility. Some of our users have
partially hedged their lookbacks with no touch bets paying out an
amount equivalent to the stake if the lookback does not at pay out a
certain minimum. It costs a bit but reduces the risk considerably. The
viability of this depends on the implied vol and other parameters at
the time - sometimes it is worthwhile, sometimes not.

-----------------------

On your last note, about the leader-board: everyone starts with 10,000
virtual dollars. In your case, your profit of 958 means you are at
+9.58%. In other words, the percentage is based on the initial funding
of 10,000. This normalizes everyone's gains/losses and guarantees a
correct comparison of performance. We have observed a positive
correlation between the use of long volatility bets (one touches,
lookbacks, time switches etc and % gains in the FX bets).

-----------------------

In relation to your question about time value:

Time decay can work for or against you, depending on which bet type
you make and where the strike is in relation to spot. Where time value
works for you, market volatility is against you and vice versa.

If you buy a Binary range (IN), Binary (in the money), TimeSwitch (in
the money), a TimeSwitch range (IN), a No Touch or a No Touch range
you earn positive time value as you profit from low market volatility.

If you buy a Lookback, One Touch, One Touch range, Binary (out of the
money), Binary Range (OUT), TimeSwitch (out of the money), TimeSwitch
range (OUT) or a Trend Multiplier you you earn negative time value as
you profit from high market volatility.

-----------------------

Some bets pay the stake back to the winner, others do not. A Lookback
is just an infinite series of One Touches paying out $x every time the
market touches a new point (up or down depending on the bet bought).

-----------------------


I hope that this is helpful. If you think of ways we can improve the
site please do tell us - we wish to make it optimal for your use.


Best Regards,
John Ansbacher
 
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