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Bitcoin ETF Series (COIN) Guide

The COIN contract is a prediction futures contract. The futures contract is binary, meaning it will either settle at 0 or 100.

Binary Payout Guidelines

The COIN contract is a prediction future on the proposed rule change to BZX Rule 14.11(e)(4), Commodity-Based Trust Shares, to list and trade Winklevoss Bitcoin Shares (COIN ETF) issued by the Winklevoss Bitcoin Trust. The SEC file number is File No. SR-BatsBZX-2016-30.

COIN will settle at 0 if the SEC does not approve the proposed rule change.

COIN will settle at 100 if the SEC approves the proposed rule change. (Note: this includes the scenario in which the SEC does not disapprove the rule change by March 11, as this implies an automatic approval)

Note: Because March 11 is a Saturday, there is a possibility that no public announcement will be made until Monday 13 March 2017. Therefore, COIN_BH17 will settle on Tuesday 14 March 2017 at 00:00 UTC.

How Are COIN Futures Quoted?

COIN futures may trade between 0 and 100. Traders enter their quotes which represent their view on the probability of the event happening.

Contract Calculations
Contract Value 0.0001 XBT
XBT Contract Value Contract Value * Futures Price
PnL Calculation # Contracts * Contract Value * (Exit Price - Entry Price)

Traders who believe that the rule change will be denied will sell COIN contracts. Traders who believe that the rule change will be approved will buy COIN contracts.

Margin and Leverage

No leverage is offered on COIN contracts.

Sellers of COIN contracts must post the difference between 100 and their entry price as margin. This ensures that should COIN settle at 100, shorts have enough margin to cover their losses.

Buyers of COIN contracts must post the full Bitcoin contract value using their entry price as margin. This ensures that should COIN settle at 0, longs have enough margin to cover their losses.

Trade Example

A trader goes short 100 COIN contracts at a price of 50. The trader’s margin requirement is 0.50 XBT: 100 * (100 - 50) * 0.0001 XBT.

A trader goes long 100 COIN contracts at a price of 50. The trader’s margin requirement is 0.50 XBT: 100 * 50 * 0.0001 XBT.

Settlement

COIN will settle at 0 or 100 on the settlement date pursuant to the Binary Payout Guidelines referenced above.

Trade Example

A trader believes that the proposed rule change will be approved. He goes long 100 COIN contracts at a price of 50.

On the settlement day the rule change is approved, and the contract settles at 100.

The trader’s profit will be: 100 * 0.0001 XBT * (100 - 50) = 0.50 XBT

A trader believes that the proposed rule change will not be approved. He goes short 100 COIN contracts at a price of 50.

On the settlement day the rule change is denied, and the contract settles at 0.

The trader’s profit will be: -100 * 0.0001 XBT * (0 - 50) = 0.50 XBT