Since my brother became interested in cryptocurrency a few months ago, he regularly sends me articles on anything crypto related. It has become a hobby of mine to tear apart misleading, misinforming, or downright ignorant articles from the mainstream, corporate media.
The latest: Trader makes million-dollar bet that bitcoin will triple next year. Here's the bullet points from the post by Evelyn Cheng.
- Online records from New York-based digital currency trading platform LedgerX showed 275 call options expiring Dec. 28, 2018, were bought in Wednesday's trading session.
- The options were bought at a volume-weighted average price of $3,600, meaning roughly $1 million was spent on the bet.
- With bitcoin trading near $16,700 Thursday, that means the trader or traders expect the digital currency to soar more than 200 percent in the coming 12 months.
Dear Evelyn Cheng,
If a trader buys a call option it does not necessarily mean that they are bullish. Options can be used to hedge, as a more secure form of stop loss while simultaneously shorting the underlying asset, or even to profit from a sideways market by also buying a "put" option.
In other words the statement, "that means the trader or traders expect the digital currency to soar more than 200 percent in the coming 12 months," is not necessarily true. There is no way to know if the trader is bullish or bearish without examining their entire portfolio.
Next time, please educate yourself properly before pumping out a hype piece.
--
Sky_pal