I was reminded of the characterization of cryptocurrencies as "Perpetual Zero Coupon Bonds": https://martincwwalker.medium.com/impossible-finance-the-per...
All non-dividend paying stocks are zero-coupon perpetual bonds anyway. Nothing new about it
How an obscure OTC-traded derivative from the 80s took over crypto
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Re: How an obscure OTC-traded derivative from the 80s took over crypto
#12Earlier quoted context omitted.
First time hearing about Zero coupon bonds and Perpetual bonds... Nonetheless, wouldn't author's description of perpetual zero coupon bond apply to many (most? all?) fiat currencies as well, since these are not really backed by anything anymore?
You can think of currency as a negative coupon bond, even - if you hold onto cash you generally expect it to lose value. In order to function properly as a currency, an asset needs to be the least volatile liquid asset available in the economy (or at least to be competitive along this axis). The expectation the asset will slowly depreciate is compatible with this requirement. The expectation that your currency is a h…
Cash does not have a negative coupon. Cash has no coupon.
I feel introducing quasi terminology helps confuse rather than help.
Index linked bonds, I think you're getting at the concept by talking about inflation, are linked to price changes. Check the actual price index (CPI, RPI, etc) of linkage for what price changes.
Most bonds are not index linked, not hedged against inflation, and have a fixed coupon. Whether or not that fixed coupon is or isn't above inflation depends on what inflation is. That's why bonds are classed as 'fixed income', or in alternate terminology 'financial assets' (not 'real' where 'real' has some link to inflation, or nominal incomes).
Further, bonds vary widely in terms of coupon, can be stripped of coupons, etc. So rather than coupon, yield to maturity might be more useful to look at vis inflation.
Re: How an obscure OTC-traded derivative from the 80s took over crypto
#13> “The only question is: Which exotic derivative will be the next? At Everstrike, we think it will be the everlasting option.”
Wasn’t expecting that promo at the end, but who am I kidding, no one writes seriously about crypto without promoting something.
Re: How an obscure OTC-traded derivative from the 80s took over crypto
#14> “The only question is: Which exotic derivative will be the next? At Everstrike, we think it will be the everlasting option.” Wasn’t expecting that promo at the end, but who am I kidding, no one writes seriously about crypto without promoting something.
Perpetual options already exist, ie squeeth
Re: How an obscure OTC-traded derivative from the 80s took over crypto
#15Perpetual futures are so nice compared to regular tradfi ones. Having to roll over your ES or NQ futures serves no purpose (and it's not like any other future besides the front month is liquid anyways) and is probably just a scam by CME to induce more trading volume.
That being said regular futures do make sense for stuff like commodities.
Re: How an obscure OTC-traded derivative from the 80s took over crypto
#16Perpetual futures are so nice compared to regular tradfi ones. Having to roll over your ES or NQ futures serves no purpose (and it's not like any other future besides the front month is liquid anyways) and is probably just a scam by CME to induce more trading volume. That being said regular futures do make sense for stuff like commodities.
Doesn’t that beg the question? Why hasn’t a platform capitalised on the perpetual future in tradfi markets.
I can understand why CME might not. But why wouldn’t a new entrant like robinhood launch perpetual futures?
Re: How an obscure OTC-traded derivative from the 80s took over crypto
#17Perpetual futures are so nice compared to regular tradfi ones. Having to roll over your ES or NQ futures serves no purpose (and it's not like any other future besides the front month is liquid anyways) and is probably just a scam by CME to induce more trading volume. That being said regular futures do make sense for stuff like commodities.
Perpetual futures make sense for crypto because it has no physical presence and arguably no real uses beyond speculation. For commodities, for most of which finance and more specifically futures conrracts are really a secondary tool to smoothen the real world use cases, expiry and delivery etc. is a feature and not a bug.
Re: How an obscure OTC-traded derivative from the 80s took over crypto
#18Perpetual futures are so nice compared to regular tradfi ones. Having to roll over your ES or NQ futures serves no purpose (and it's not like any other future besides the front month is liquid anyways) and is probably just a scam by CME to induce more trading volume. That being said regular futures do make sense for stuff like commodities.
Doesn’t that beg the question? Why hasn’t a platform capitalised on the perpetual future in tradfi markets. I can understand why CME might not. But why wouldn’t a new entrant like robinhood launch perpetual futures?
Because perpetual future doesn't make sense for a lot of things people trade futures for: corn, soybean, crude oil. They have physical presence and in some cases an expiry date.
There are futures for other financial instruments or indexes where it might make more sense, but there the use of futures is more about hedging than owning the underlying, since it's not as complicated as owning your own crypto and keeping it safe.
Re: How an obscure OTC-traded derivative from the 80s took over crypto
#19Missing from this list is OANDA, which had perpetual forex contracts for a long time. Interest was paid/received every second, instead of having a tommorow-next model as the other forex brokers do.
Re: How an obscure OTC-traded derivative from the 80s took over crypto
#20> “The only question is: Which exotic derivative will be the next? At Everstrike, we think it will be the everlasting option.” Wasn’t expecting that promo at the end, but who am I kidding, no one writes seriously about crypto without promoting something.
If you are an American and want to experiment with perps and aren’t confident with defi, you can become a Palauan resident and trade on Bybit (Dubai) and some other offshore exchanges legally.