How Bitcoin Derivatives Work with Juthica Chou

“You need to be able to withstand the fluctuations because one of the biggest dangers of leverage is you get closed out at precisely the wrong time...if you’re short and bitcoin rips up you get closed out.”— Juthica ChouLocation: RemotelyDate: Tuesday 22nd JuneProject: KrakenRole: Head of OTC Options TradingDerivatives are contracts that allow traders to take a position with an asset based on possible outcomes; while they can provide dramatic rewards, they come with risk.Derivative exchanges have been a growing part of the maturing bitcoin ecosystem. However, with the rise of exchanges like FTX and Binance, offering high leverage, there is an increasing lens on these exchanges. Derivative contracts are a valuable tool for experienced traders. With exchanges offering leverage of up to 125x, inexperienced traders can quickly amass significant losses.Whenever bitcoin has a sharp move in either direction, those on the wrong side of the trade often get liquidated. These capitulation events regularly wipe out hundreds of millions or even billions of dollars in positions. Some people suggest that high amounts of leverage are detrimental to the price discovery of bitcoin, but it's clear from the rise of certain exchanges that these are the types of markets traders want. In this interview, I talk to Juthica Chou,  Head of OTC Options Trading at Kraken. We discuss how bitcoin derivatives work, the different types of contracts, and Microstrategy's leverage plays.This episode’s sponsors:Gemini - Buy Bitcoin instantlyBlockFi - The future of Bitcoin financial servicesSportsbet.io - Online sportsbook & casino that accepts BitcoinCasa - The leading provider of Bitcoin multisig key security.Exodus - The world's leading Desktop, Mobile and Hardware crypto wallets.Ledger - State of the art Bitcoin hardware walletRevolut - A better way to handle your money-----WBD366 - Show Notes-----If you enjoy The What Bitcoin Did Podcast you can help support the show by doing the following:Become a Patron and get access to shows early or help contributeMake a tip:Bitcoin: 3FiC6w7eb3dkcaNHMAnj39ANTAkv8Ufi2SQR Codes: BitcoinIf you do send a tip then please email me so that I can say thank youSubscribe on iTunes | Spotify | Stitcher | SoundCloud | YouTube | Deezer | TuneIn | RSS FeedLeave a review on iTunesShare the show and episodes with your friends and familySubscribe to the newsletter on my websiteFollow me on Twitter Personal | Twitter Podcast | Instagram | Medium | YouTubeIf you are interested in sponsoring the show, you can read more about that here or please feel free to drop me an email to discuss options.