Trading Hall of Fame: The Bitcoin Options Bet That Made $58.2M Profit on Just $638K

Thursday 14 January 2021, 5:07 AM AEST - 2 weeks ago

If crypto trading had a Hall of Fame, this trade would surely be in it.

With a 9,118% return on investment, a bitcoin options trade initiated in late October is trouncing some of the best currency market bets of the past 40 years by leaps and bounds.

On Oct. 30, someone (a single trader or small group) bought 16,000 contracts of Jan. 29 expiry call options at the $36,000 strike for 0.003 bitcoin (BTC, +1.94%) per contract, according to data shared by Deribit. The initial investment or total purchase cost was 48 BTC, or roughly $638,400 as per bitcoins price back then.

At press time, the $36,000 call option is drawing a price of 0.1060 bitcoin on Deribit. At current prices, which havent changed much in the past 24 hours, and assuming the position is still active, the trader appears to be sitting on a gain of 1,648 bitcoin or $58.2 million.

Here is how we arrive at the net return:

= [(Option's current price of 0.1060 BTC x 16,000 contracts) x bitcoin's current spot market price of $34,700] minus (-) cost of trade.

= [1,696 bitcoin x $34,700] - $638,400

= $58,851,200 - $638,400

= $58,212,800

Thats a 9,118% return on investment. The trader would have made significantly less money in the spot market because bitcoin is currently up over 150% from the Oct. 30 average of around $13,700.

The staggering four-digit return is far greater than what veteran trader George Soros reportedly earned in September 1992 when he shorted the British pound. As recalled in Investopedia, Soros took a short position worth $10 billion and made $1 billion as the pound plunged 15% versus the German mark and 25% against the U.S. dollar.

There were others, of course. The 86% return generated by trader Louis Bacon in the 1990s by buying oil and selling stocks in anticipation of Iraqs invasion of Kuwait also looks meag ...

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