Trading Bitcoin / Ethereum Options (Selling Puts) on Deribit - Part 1

Updated: 23 December, 2019 seen 1,499

Deribit is my latest discovery from the crazy crypto world. It all has started with a simple buy and hold operations back in 2017.

What followed was, a day trading on Poloniex,  I even built a custom Ethereum mining rig. I have played with cloud mining contracts from hashflare,  and now I've found my way into Bitcoin / Ethereum options trading.

It's not that I would call myself an expert in options trading, in fact, I have made just a couple of put sales in the regular stock market - I tend to write puts against dividend stocks I would love to have (if assigned)

Investment Goal #7 - Selling Puts to Own / Generate Income

In the case of Bitcoin / Ethereum, unfortunately, there are no dividends, and taking into account high volatility the idea selling puts might actually sound wrong, instead, it seems some should buy calls. Anyhow, I'm no expert on options trading and following written should be taken with a grain of salt

Disclosure:  This article contains affiliate links to bitcoin options trading website, by clicking on links on this page and by investing with deribit, I will earn affiliate income at no cost to you. Also, I'm not a financial advisor and I don't give you any advice, I'm just sharing my own experience. Investments in stocks, funds, bonds or cryptos are risk investments and you could lose some or all of your money. Do your due diligence before investing in any kind of asset. 

Depositing Funds

As I had some ETH both on Coinbase and Poloniex accounts, I thought cool - I will make a direct transfer, but on the deribit ethereum deposit pages it was said that exchanges might not work and better to use ethereum wallet for transferring funds to deribit.

Warning about depositing funds on Deribit

Warning about depositing funds on Deribit

Luckily I had a MyEtherWallet and I transferred some ETH from Poloniex to MyEtherWallet​

It was not long and ETH was already in MyEtherWallet, next was to transfer it to Deiribit.

To play safe I decided to transfer just 0.5 ETH to Deribit (equals to $81.95)

In a matter of another couple of minutes -  and ETH was deposited on Deiribit.

Now it was time to get hands dirty and make first options trade on Deiribit platform

Writing a put on Deribit

I decided to start low with writing puts against ETH.

Unfortunately, there were not many options for ETH, just four with expiration today, with expiration after a week, two months and five months.

I made the following put 
Order Type: Market
SELL ETH-28JUN19-100-P x 1
Margin =  0.10261162

I was hoping to see my total balance increase, but instead, I saw it actually decreasing. Strange. Made another put sell, this time:


Again, total balance decreased.

Made more put sells, still total balance decreasing.

Then under the transaction log I found all my trades listed, and also this was the first place where I finally saw balance increasing:

Transaction log

Transaction log

Now, there are more questions than answers right now. Because I still don't understand, if I have made 3 put sell today, collected in premium 0.0984 eth, how comes that my equity balance is 0.4749, not 0.5984, also where is this premium?

Either there is some catch, or there is something I don't just get it?

Anyhow, here is what it should look like, so I deposited 0.5 eth today and sold 3 different premiums with one expiration day on June 28, 2019, In total I collected 0.0984 eth. Sounds like 19.8% yield in less than 78 days to me.

With today's ETH/USD exchange rates that would give me $16.34 in premium. Humble, but for getting my foot wet, pretty good.

The Bottom Line

Seems I will come out with Part 2, after June 28. Because right now, despite I have successfully transferred funds to the platform and made 3 put sells I still don't understand how this platform is operating.

If you want to give it a try, and bear the risk, here is my affiliate link to Deribit signup page, by using this link I will get an affiliate income at no cost to you,