Financial markets are called incomplete when there are more random sources than traded assets and can occur in unlimited quantities. Therefore, there is no way to determine the fair price of the underlying asset or futures contract. Because, assuming, the market is incomplete, a person will not be able to hedge a generic contingent claim (option). In particular, there will be no unique price for generic derivatives (futures and options).
In 'complete' financial markets, the price of each derivative will be uniquely determined by the absence of the required arbitration. In hedging terms, this means that the price is unique because the derivatives can equally be replaced with the mock portfolio. In an incomplete market, no arbitrage requirement is no longer sufficient to determine a unique price for an option. There are several possible sizes of martingale, and some market price risks. The reason that there are several possible actions of martingale only means that there are several different pricing systems for derivatives, all of which are consistent with the absence of arbitration.
Examples of such markets may be the choice of weather because in such cases arbitration is not possible due to the fact that there is no underlying instrument of weather. Another consideration would be the price impact of the earnings announcement, when EPS news will come out and the date of such event is set and famous in advance. Such occurrences generally indicate varying degrees of probability for significant price changes in the stock market.
Cryptocurrency is also an example of such a market. Cryptocurrency can not be sold for short, so people can not hedge. In addition, significant price changes also exclude the possibility of hedging. In the ordinary market, the option seller generates premium by selling the option and has the opportunity to hedge the options sold. In the case of cryptocurrency, hedging is not possible, which means that the premium to be demanded by the seller will be very high because it has to compensate for the risks in the absence of hedging opportunities in an incomplete market.
Large premiums lead to a decrease in liquidity and, as a result, higher premiums and implied volatility. However, cryptocurrency markets require financial instruments through which it is possible to protect the high volatility values in this currency.
Parimutuel is a betting system in which all bets of a certain type are placed together into the game and the payout opportunity is calculated given that the pool will be distributed among the winning bets. Suitable parimutuel has several unique properties that distinguish it from traditional methods to match buyers with sellers (multiple auction systems).
The inverted parimutuel model differs from the standard parimutuel model by fixing a fixed payment amount at the time of sale. Here are some key advantages: It does not require the buyer to be matched with the seller in order for a trade to take place. In fact, reverse parimutuel matching can result in trade only with buyer options; Produce lower option price; Ensure that all participants pay into the public pool (and provide methods for monitoring the collection); No warranty, margin or initialdeposit required; Provide decentralized trading system; In the future, we hope to divide the option contract into sub-components (basic status) and enable participants to trade, all individual options and components of the options provided.
Advanced Parimutuel Options (APO) is a decentralized platform based on parimutuel bets for cryptocurrency derivatives. The pari-mutuel bets can be defined as a betting system in which the same bets are put into the pool and then the payout opportunity is calculated while considering that the pool will be distributed among the winning bets.
One of the main problems facing the cryptocurrency market is the high premium offered by sellers of options and this can be attributed to the fact that hedging is not possible in this type of market. The absence of a hedging opportunity means that the seller of the option can not protect himself from the risks arising in the highly fluctuating crypto market and thus the high premium will be for the purpose of compensating for the risk.
Advanced Parimutuel Options tries to solve this problem by introducing a new concept known as reverse pari-mutuel, which is a new way of trading options on cryptocurrency.
APO works in three stages: Auction: During this stage, premiums and payments will be calculated based on the total number of bids submitted. Participants then select the option that best suits them and then enter the strike price of the underlying asset in Bitcoin or Ethereum. They then select the type of order and the amount necessary to purchase the option into a smart contract account.
Trafficking: Collections are formed after calculating bids filed during the auction. Participants are allowed to observe and monitor the value of the options obtained after they complete the transaction; Expired: This is the last stage and it happens after the contract expires. The price of the underlying asset is locked and the cut-off price is published. After this, payments are made to participants whose options are favorable.
The advantages of joining this project include: Transparency: Smart contracts integrated into the APO system ensure that there is transparency as participants can easily monitor platform activity. The smart contract also ensures that the winner is always paid in full; Decentralization: This platform is based on the principle of Smart contracts, which are decentralized and thus result in faster transactions and increased platform efficiency.
Fulfillment of Liability: The platform completely eliminates the risk of unfinished obligations because the option premium is paid directly by the buyer to the pool and therefore the seller is not involved; Dividend: The platform only facilitates trade and it imposes a commission for it. The commission is then distributed to the token holder as a dividend.
Insurance: To provide bearings for investors and miners against falling markets, the platform does not require any margin; Flexibility: Investors and miners are allowed to build their own options that can range from binary to exotic, they are also allowed to use existing templates such as vocations and vanilla venues.
Conclusion: Derivative circulation is an integral part of the financial market. In the cryptocurrency market, classical instruments do not work correctly, because of the lack of opportunities for sellers and market makers to cover their risks. We have long studied the possibility of creating a platform for derivative trading, but we came to the conclusion that the tool could lead to centralization, and also largely unfavorable to market participants.
After dedicating more than 6 months of mathematical analysis, research and research, APO Finance invented reverse parimutuel approaches. This tool will help protect the participants' assets remembering the cryptocurrency market youth, and their high sensitivity to news events.
APO Finance comes in the form of a digital currency named APO. APO Tokens will go on sale from April 25, 2018 to May 23, 2018, at a price of 15,000 APO equivalent to 1 ETH. The token purchase itself can be done with foreign digial currency such as ETH. Do not forget, get also purchase bonuses at certain time period.
APO Finance itself is the result of teamwork that seeks to provide their best capabilities in this project. In addition, the team also strives to provide the best benefits and services, to anyone interested in joining the project.
So that' s all our ICO project review for this time, hopefully can increase your knowledge in choosing the best project ICO to you invest. If you are interested in joining this project, or intend to buy a token in the sale. You can visit their official website and page below:
0 komentar: