MPOE, April 2013 Statement

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Operational results, MPOE

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Overall trade 39`285 contracts, of which -21`445 +4`922 Call, -5`800 +7`118 Put.

Revenue : 7`924.42857538 BTC, of which :

• contracts sold : 7`814.06317029 BTC
• contracts exercised : 110.36540509 BTC

Expenditure : 10`134.234236 BTC, of which :

• contracts bought : 3`415.89204295 BTC
• contracts exercised : 5`912.70094314 BTC
• capital expenses : 805.64125 BTC (6`445.13 × 12.5%)

Loss : -2`320.17106571 BTC

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Operational results, MPEx

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Revenue : 768.42012190 BTC, of which :

• Revenue from sales fee : 48.42012190 BTC (Total trade : 24`210.06095437 BTC)
• Revenue from new accounts : 720 BTC

Expenditure : 12 BTC, of which :

• PR, 12 BTCⁱ
• Servers, 0 BTCⁱⁱ

Profit : 756.4201219 BTC

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Shareholders table

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Total shares : 1`000`000`000, of which :

1. Mircea Popescu, 888`284`714 shares,
2. Third parties 111`715`286 shares.

Total dividend : 756.4201219 BTC.

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Bondholders table

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Total capital : 6`445.13, of which

1. 1Cg6JS9LkK7JRV87dGob7h5rz4pTuhzfb6 117.00000888
2. 1NTfLJi1AZgzeXNHF5Gx1sAmRj6RBE7qxe 150.00000888
3. 1GNKg5wuNmM4spsnMdz745x76ntnAiXKnS 100.00000888
4. 1swAzHw1zTWqoi5184VinvUxLWnBskPVW 2`480.68958644
5. 1CqQiHmp2T3TWXZx3J7yueDxH5rVnZ9A94 1`155.2032859
6. 1A2hqHVSUERAT3t1yJ7ggYCQccvH6pZGZm 1`943.24074831
7. 1D7YtrxnyK3ug3Rvp9jX66T8kVzWww9Jr8 498.99635271

Loss applicable to bond capital : 2`320.17106571 BTC
Loss per BTC : 0.359988249.

MPBOR valid April 26th through May 31st : 12.5%.

Final bondholder list :

1. 1Cg6JS9LkK7JRV87dGob7h5rz4pTuhzfb6 74.88138055
2. 1NTfLJi1AZgzeXNHF5Gx1sAmRj6RBE7qxe 96.001768333
3. 1GNKg5wuNmM4spsnMdz745x76ntnAiXKnS 64.001180783
4. 1swAzHw1zTWqoi5184VinvUxLWnBskPVW 1`587.670485905
5. 1CqQiHmp2T3TWXZx3J7yueDxH5rVnZ9A94 739.34367777
6. 1A2hqHVSUERAT3t1yJ7ggYCQccvH6pZGZm 1`243.69691394
7. 1D7YtrxnyK3ug3Rvp9jX66T8kVzWww9Jr8 319.363529441

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Miscellaneous

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As it turns out, no sunnier days : April was much worse a month than March.

This month BTC went from 90 to 260, that's +190%. Then it went back down to 120, thats -55%. Consequently we took losses, especially on the Call side. Most of the Put action was early so it ended up propping the book some, but even so overall trade ended up at a loss.

Last month BTC just went from 35 to 90, +160%. Our (actual, ie excluding interest) loss this month is 21.78%. It compares favourably to last month's -23.11%, especially considering the significant worsening of price evolutions this month. Even so, it is still a loss.

If it's any consolation, things could have been lots, lots worse. The main reason that never happened was that the precipitous decline made the bot think we've come to the end of Bitcoin, and it proceeded to price accordingly. Starting on the 11th, so for most of the month, Puts struck at 500 were offered for ~50 BTC (implying USD/BTC around 10 or so) and most of the Calls for over 1 BTC, as much as 1.4 for the low strikes (a Call can never be worth more than 1, obviously).

One of the results of this was practically no options trade for most of this month. This led to much lower than average overal contracts traded, remarkably low capital base used by the bot and so forth. We've been working hard taking apart and examining the price model, and the ultimate conclusion is that some assumptions baked in ended up mixing end-of-the-world behaviour with actual pricing, which only becomes obvious in some edge cases. Edge cases such as the month April 2013.

The practical alternatives were to either let the bot be, which would have resulted in a slow but likely recovery over the span of a few months (4 ? 5 ?) or else intervene and make some changes to the pricing model. I think it's not sensible to take the former route, and so for the first time in a year the bot has been actually changed. I am confident that the changes are well researched, well modelled and strengthen rather than weaken the bot and its general prospects in the marketplace. Even if I had the changes ready for about a week now, I judged it unfair to apply them before the end of the month, because I consider mid month changes to the model an infringement of bondholder rights.

If you hold MPEx bonds you are well advised to consider carefully the bot pricing as visible on the site currently, and to make your own determination as to its worthiness. You have, as always, the entire weekend as a grace period, during which bonds can be withdrawn, interest rates can be changed or new bonds made that count for the current month (May).

The strikes between 320 and 500 will be temporarily removed. They can be easily enough added back in should the market situation warrant it in the future.

In closing, I want to say that the bleeding red in the bondholders table makes me sad. It's the people providing the capital for MPOE bonds that are helping stabilise Bitcoin. It's them making it useful and usable. It's them, basically, giving it a future. Unfortunately the hordes of get-rich-quick noobs allied with the howling incompetence of so called "exchanges" have prevailed - again - this month. Hopefully it's their last.

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1. In spite of BTC spiking to 260 this month, PR only gets a 30% ish raise from deflationary currency bonuses. Woe unto employers. [↩]
2. See March report. [↩]