Fixed margin will isolate your margin to the individual position you have made in an instrument. So if you have 1 bitcoin in your account and you put 0.2btc margin for a Weeklies Futures long position, and it gets margin-called, you still have the 0.8btc left. However, if you're on cross-margin, also known as portfolio value margin, then your whole balance on the site is going to be used to back all your positions, and if you get margincalled, it's because you have run out of money on your whole account.
As of September 16, 2017, the Trustees and officers of the Trust, as a group, owned outstanding shares that entitled them to give voting instructions with respect to less than one percent of the shares of any series of the Trust; except that Mr. Michael L. Sapir owned more than 25% of the outstanding shares of ProShares S&P 500 Ex-Financials ETF and ProShares S&P 500 Ex-Health Care ETF.
If you are serious about cryptocurrency trading, I strongly recommend finding a mastermind group that suits your skill level and budget so that you can improve your knowledge, expose yourself to less risk, and gain access to news and tips before they hit the mainstream market – this is where the real money is to be made. In my opinion, your best bet is to sign up to use the Notorious Bot as you get a ton of value not only from the bot but also from the Discord channel where you have access to veteran traders and analysts.
So be aware of the premium or discount that is on longer dated contracts, this can allow you some arbitrage opportunities if you are patient and have the coins to apply to it. In general, we recommend that you trade any contract that has good liquidity and high volume. This is the most important characteristic of ANY product for a trader. If you can't get in and out reliably, and have a price that reasonably follows the spot market behavior, then it's not worth trading.
Investors in the ProShares Short Bitcoin Futures Strategy ETF should understand the consequences of the “short” strategy employed by the Fund, which is subject to, among others, compounding and market volatility risk. The Fund may adjust its short exposure as frequently as daily basis which entails obtaining additional short exposure as the Fund experiences gains, and reducing short exposure as the Fund experiences losses. As a result, the Fund’s performance may be more vulnerable to the effects of compounding than funds that do not seek to provide short investment exposure. During periods of high volatility, this risk may be exacerbated and the Fund may have losses as a result of such adjustments.
The Declaration of Trust of the Trust disclaims liability of the shareholders or the Officers of the Trust for acts or obligations of the Trust which are binding only on the assets and property of the Trust. The Declaration of Trust provides for indemnification of the Trust’s property for all loss and expense of any Funds shareholder held personally liable for the obligations of the Trust. The risk of a Trust shareholder incurring financial loss on account of shareholder liability is limited to circumstances where the Funds would not be able to meet the Trust’s obligations and this risk, thus, should be considered remote.
If I held the opinion that an asset was going to go one way, but then made the research and it turned out that I started thinking it might actually be headed the other way, I should feel no obligation to hold on to my original opinion, just because I didnt want to feel I’ve been initially wrong. This seems obvious but is much tougher in practice for inexperienced investors.
When a Fund purchases a put or call option on a futures contract, the Fund pays a premium for the right to sell or purchase the underlying futures contract for a specified price upon exercise at any time during the option period. By writing (selling) a put or call option on a futures contract, a Fund receives a premium in return for granting to the purchaser of the option the right to sell to or buy from the Fund the underlying futures contract for a specified price upon exercise at any time during the option period.
Futures contracts with a longer term to expiration may be priced higher than futures contracts with a shorter term to expiration, a relationship called “contango.” Conversely, futures contracts with a longer term to expiration may be priced lower than futures contracts with a shorter term to expiration, a relationship called “backwardation.” Contango and backwardation have different impacts on ProShares Bitcoin/Blockchain ProShares Bitcoin Futures Strategy ETF, ProShares Bitcoin Futures/Equity Strategy ETF and ProShares Bitcoin/Blockchain Strategy ETF (each, a “Bitcoin Fund”) and ProShares Short Bitcoin Futures Strategy ETF (the “Short Bitcoin Fund”).
the price of Bitcoin and Bitcoin Futures Contracts. In particular, it is possible that the price of the Bitcoin Futures Contracts subsequent to a “fork” may be linked to the price of bitcoin on only one of the resulting Bitcoin Networks, rather than the aggregate price of bitcoin on all resulting Bitcoin Networks. The CBOE Futures Exchange (“CFE”) and Chicago Mercantile Exchange (“CME”) have announced different protocols for addressing forks.
Currently the front month future is the January contract which at last check could be sold for $17,600. This contract settles in a cash transfer based on the 4:00 pm eastern bitcoin auction price on Wednesday January 17, 2018 established by Gemini who is partnering with Cboe Global Markets. The bitcoin price at Gemini is close to $16,600 so I will use that for the underlying bitcoin price in this example.
Portfolio managers are generally responsible for multiple investment company accounts. As described below, certain inherent conflicts of interest arise from the fact that a portfolio manager has responsibility for multiple accounts, including conflicts relating to the allocation of investment opportunities. Listed below for each portfolio manager are the number and type of accounts managed or overseen by such portfolio manager as of May 31, 2017.
Although certain securities exchanges attempt to provide continuously liquid markets in which holders and writers of options can close out their positions at any time prior to the expiration of the option, no assurance can be given that a market will exist at all times for all outstanding options purchased or sold by a Fund. If an options market were to become unavailable, the Fund would be unable to realize its profits or limit its losses until the Fund could exercise options it holds, and the Fund would remain obligated until options it wrote were exercised or expired. Reasons for the absence of liquid secondary market on an exchange include the following: (i) there may be insufficient trading interest in certain options; (ii) restrictions may be imposed by an exchange on opening or closing transactions or both; (iii) trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options; (iv) unusual or unforeseen circumstances may interrupt normal operations on an exchange; (v) the facilities of an exchange or the OCC may not at all times be adequate to handle current trading volume; or (vi) one or more exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options) and those options would cease to exist, although outstanding options on that exchange that had been issued by the OCC as a result of trades on that exchange would continue to be exercisable in accordance with their terms.
Investments by a Fund in a wholly-owned foreign subsidiary, debt obligations issued or purchased at a discount and certain derivative instruments could cause the Fund to recognize taxable income in excess of the cash generated by such investments, potentially requiring the Fund to dispose of investments (including when otherwise disadvantageous to do so) in order to meet
For each intervening holiday in the applicable foreign market that is not a holiday observed by the U.S. equity markets, the redemption settlement cycle will be extended by the number of days of such intervening holiday. In addition to holidays, other unforeseeable closings in a foreign market, including due to regulatory action, may also prevent a Fund from delivering securities within the normal settlement period.
For purposes of the diversification test described in subparagraph (b) above, the term “outstanding voting securities of such issuer” will include the equity securities of a qualified publicly traded partnership. Also, for purposes of the diversification test in (b) above, the identification of the issuer (or, in some cases, issuers) of a particular Fund investment can depend on the terms and conditions of that investment. In some cases, identification of the issuer (or issuers) is uncertain under current law, and an adverse determination or future guidance by the IRS with respect to issuer identification for a particular type of investment may adversely affect the Fund’s ability to meet the diversification test in (b) above.
Each Fund may be required to withhold federal income tax (“backup withholding”) from dividends and capital gains distributions paid to shareholders. Federal tax will be withheld if (1) the shareholder fails to furnish the Fund with the shareholder’s correct taxpayer identification number or social security number, (2) the IRS notifies the shareholder or the Fund that the shareholder has failed to report properly certain interest and dividend income to the IRS and to respond to notices to that effect, or (3) when required to do so, the shareholder fails to certify to the Fund that he or she is not subject to backup withholding. The backup withholding rate is 28%. Any amounts withheld under the backup withholding rules may be credited against the shareholder’s federal income tax liability.
Jump up ^ Iansiti, Marco; Lakhani, Karim R. (January 2017). "The Truth About Blockchain". Harvard Business Review. Harvard University. Archived from the original on 18 January 2017. Retrieved 17 January 2017. The technology at the heart of bitcoin and other virtual currencies, blockchain is an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.
Typically exchanging is done through matching the buy and sell orders placed on the system of the exchange. The sell orders are made at an offer price (or ask) while the buy order (or bid) is made to buy bitcoins. It is similar to buying stocks online where you need to enter the desired price (or market price) for buy/sell along with the quantity. These orders enter the order book and are removed once the exchange transaction is complete.
In addition, the Advisor, its affiliates and principals may trade for their own accounts. Consequently, non-customer and proprietary trades may be executed and cleared through any prime broker or other broker utilized by clients. It is possible that officers or employees of the Advisor may buy or sell securities or other instruments that the Advisor has recommended to, or purchased for, its clients and may engage in transactions for their own accounts in a manner that is inconsistent with the Advisor’s recommendations to a client. Personal securities transactions by employees may raise potential conflicts of interest when such persons trade in a security that is owned by, or considered for purchase or sale for, a client. The Advisor has adopted policies and procedures designed to detect and prevent such conflicts of interest and, when they do arise, to ensure that it effects transactions for clients in a manner that is consistent with its fiduciary duty to its clients and in accordance with applicable law.
It’s reasonable to assume that a product named a future is attempting to predict the future. For Bitcoin futures, this is definitely not what they deliver. The core utility of the futures markets is not predicting the future prices of their product but rather the secure delivery of a product at a known price, quality, and date. If there’s product seasonality (e.g., specific harvest times) or foreseeable shortages/abundances then future’s prices may reflect that but neither of these factors applies to Bitcoin.
Because most ETFs are investment companies, absent exemptive relief or reliance on an applicable exemptive statute or rule, a Fund’s investments in such investment companies generally would be limited under applicable federal statutory provisions. Those provisions typically restrict a Fund’s investment in the shares of another investment company to up to 5% of its assets (which may represent no more than 3% of the securities of such other investment company) and limit aggregate investments in all investment companies to 10% of assets. A Fund may invest in certain ETFs in excess of the statutory limit in reliance on an exemptive order issued by the SEC to those entities or pursuant to statutory or exemptive relief and pursuant to procedures approved by the Board provided that the Fund complies with the conditions of the exemptive relief, as they may be amended from time to time, and any other applicable investment limitations.
• Compounding Risk — In the course of managing the Fund’s investments, ProShare Advisors will need to periodically adjust the Fund’s holdings in order to maintain investment exposure approximately equivalent to the Fund’s assets. This process entails obtaining additional inverse exposure as the Fund experiences gains, and reducing inverse exposure as the Fund experiences losses. The higher the volatility of the bitcoin futures contracts in which the Fund invests, the more such rebalancing can adversely affect the Fund’s performance.
• Theft, loss or destruction. Transacting on a blockchain depends in part specifically on the use of cryptographic keys that are required to access a user’s account (or “wallet”). The theft, loss or destruction of these keys impairs the value of ownership claims users have over the relevant assets being represented by the ledger (whether “smart contracts,” securities, currency or other digital assets). The theft, loss or destruction of private or public keys needed to transact on a blockchain could also adversely affect a blockchain company’s business or operations if it were dependent on the ledger.
• A decline in the adoption of bitcoin could have a negative effect on the price of bitcoin and bitcoin-related investments. Bitcoin’s adoption has been on a generally continuous climb since bitcoin first gained mass media attention in 2013. However, there can be no guarantees this growth will continue. Further, adoption of bitcoin as a means of payment has been limited when compared with the increase in the price of bitcoin, indicating that the majority of bitcoin’s use is for investment and speculative purposes. A lack of acceptance of bitcoin as a means of payment could negatively impact the price of the Bitcoin Futures contracts in which the Fund invests.
Don’t invest blindy. There are people in this world who would sell a blind person a pair of glasses if they could make money. Those same people play in the cryptocurrency markets and use every opportunity to exploit less-informed investors. They’ll tell you what to buy or claim certain coins will moon, just to increase the prices so they can exit. Due to the highly speculative nature of the cryptocurrency markets today, a good investor will always do his or her own research in order to take full responsibility for the potential investment outcome. Information coming from even the best investor is, at best, great information, but never a promise, so you can still get burned.
• Intellectual property rights claims may adversely affect the operation of the Bitcoin Network. Third parties may assert intellectual property rights claims relating to the operation of the Bitcoin Network. Regardless of the merit of any intellectual property or other legal action, any threatened action that reduces confidence in the Bitcoin Network’s long-term viability or the ability of end-users to hold and transfer bitcoin may adversely affect the price of bitcoin and adversely affect the price of the Bitcoin Futures Contracts held by the Fund.
There are two USA regulated Bitcoin futures exchanges in operation. The CME’s contract unit is five Bitcoins whereas the Cboe’s contract unit is one—that’s the biggest difference between these futures. The upfront money to buy or sell short a CME contract will be about five times higher than the Cboe contract. Larger investors won’t care but this will be an issue for smaller investors. Another difference is the spot/settlement process that the exchanges use. In the case of Cboe futures, the contracts will be settled to a 4 pm ET Gemini exchange auction price on the day of expiration, for the CME futures the settlement price is a complex calculation using an hour of volume weighted data from multiple exchanges (currently Bitstamp, itBit, Kraken, and GDAX). With the CME’s approach, it will be harder to manipulate the settlement price but it doesn’t give arbitrageurs a physical mechanism to trade their positions—possibly an issue.
The Shares are not sponsored, endorsed, sold or promoted by BofA Merrill Lynch. Neither BofA Merrill Lynch nor any of Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., Standard & Poor’s Financial Services LLC, MSCI, Inc. or Frank Russell Company (the “Exchanges and Entities”) have passed on the legality or suitability of, or the accuracy or adequacy of descriptions and disclosures relating to, the Shares, nor do they make any representation or warranty, express or implied, to the owners of the Shares or any member of the public regarding the advisability of investing in securities generally or in the Shares particularly or the ability of the Index to track general hedge fund performance. BofA Merrill Lynch’s and the Exchanges and Entities’ only relationship to the Trust is the licensing of certain trademarks and trade names of BofA Merrill Lynch and the Exchanges and Entities and of the Index, which indices are determined, composed and calculated by BofA Merrill Lynch without regard to the Trust or the Shares. BofA Merrill Lynch and the Exchanges and Entities have no obligation to take the needs of the Trust or the owners of the Shares into consideration in determining, composing or calculating the Index. BofA Merrill Lynch and the Exchanges and Entities are not responsible for and have not participated in the determination of the timing of, prices at, or quantities of the Shares to be issued or in the determination or calculation of the equation by which the Shares are to be converted into or redeemed for cash or other assets. BofA Merrill Lynch and the Exchanges and Entities have no obligation or liability in connection with the administration, marketing or trading of the Shares.
Ultimately, the big and yet unanswered question will continue to loom: is bitcoin indeed the millennials’ gold, as strategist Tom Lee suggests, and therefore has real and measurable value, or is it simply used for speculation as investors like Jack Bogle and Warren Buffet have implied? The answer that important investors will come up with for that question should have a significant impact on the price movement of bitcoin, and it is completely uncertain what it will look like.
The fund performance for a Geared ProShares Fund can be estimated given any set of assumptions for the factors described above. The tables on the next five pages illustrate the impact of two factors, benchmark volatility and benchmark performance, on a Geared Fund. Benchmark volatility is a statistical measure of the magnitude of fluctuations in the returns of a benchmark and is calculated as the standard deviation of the natural logarithm of one plus the benchmark return (calculated daily), multiplied by the square root of the number of trading days per year (assumed to be 252). The tables show estimated Fund returns for a number of combinations of benchmark performance and benchmark volatility over a one-year period. Assumptions used in the tables include: (a) no dividends paid with respect to securities included in the underlying benchmark; (b) no Fund expenses; and (c) borrowing/lending rates (to obtain leverage or inverse exposure) of zero percent. If Fund expenses and/or actual borrowing lending rates were reflected, the Fund’s performance would be different than shown.
Last night, Cboe XBTSM Bitcoin Futures commenced trading on the Cboe Futures Exchange. The launch was smooth, although our website experienced some issues due to an overwhelming number of hits looking for the trading data. Now that the futures are up and running, it may be time for a brief explanation of how an owner of bitcoins may use futures to hedge their position.
If Bitcoin futures prices get too high relative to spot arbitragers are natural sellers and if the futures prices get too low they are natural buyers. Their buying and selling actions naturally counteract price distortions between markets. If they’re somehow prevented from acting (e.g., if shorting Bitcoin was forbidden) then the futures market would likely become decoupled from the underlying spot price—not a good thing.