Perpetual Futures
The perpetual future provides indefinite, leveraged delta exposure to a specific asset.
Last updated
Was this helpful?
The perpetual future provides indefinite, leveraged delta exposure to a specific asset.
Last updated
Was this helpful?
Perpetual futures are no-expiration futures that are subject to . They are ideal for traders that want continuous delta exposure, without selecting an expiration.
They were invented in by economist Robert Shiller. in cryptocurrency markets today can be attributed to perpetual futures.
Perpetual futures on Everstrike are priced, margined and settled in . As with all perpetual futures, they are (no physical delivery of the underlying asset takes place). The settlement takes place at the time of closing a position.
Settlement
Cash
Expiration
Perpetual
Pricing Currency
evUSD
Margin Currency
evUSD
Settlement Currency
evUSD
Funding
Hourly
Funding Interval
1h
Max. Funding Rate
0.3%
Funding Period
10h
A perpetual futures contract is to a perpetual call option with strike price zero (identical payoff function). Funding for perpetual futures works in the exact same way as funding for .
Positive Funding Rate: Longs pay shorts.
Negative Funding Rate: Shorts pay longs.
Funding (Long) = -Funding Rate * Position Size
Funding (Short) = Funding Rate * Position Size
Funding takes place during the first five seconds of each hour. During this time, Everstrike takes a snapshot of all user positions, and debits/credits the margin balance of each user, according to the formula above.
To calculate the Funding Rate, first calculate the Premium:
Premium = ((Mark Price - Index Price) / Index Price)
Next, calculate the Base Funding Rate:
Base Funding Rate = Max(dampener, Premium) + Min(dampener, Premium)
Where dampener is a pre-defined constant (0.03 for futures and 1.00 for options).
Finally, calculate the Funding Rate:
Funding Rate = Base Funding Rate * (Funding Interval/Funding Period)
The Funding Period on Everstrike is 10 hours.
The Funding Interval on Everstrike is 1 hour.
Perpetual futures are cash-settled. Settlement on Everstrike takes place immediately after closing a position. Once the trader closes a position, the P/L from the position is credited to the trader's cash balance. This happens automatically, within one second of closing the position.
Perpetual futures do not expire.
Trading is disabled during the first ten seconds of each hour.
The hourly Funding Rate is capped at 0.3%.
The trader buys a BTC perpetual futures contract for $23,000. One month later, the price of the contract is $24,000. The trader has paid a total of $100 in funding. The total profit of the trader, should he decide to sell his futures contract, is the current price of the contract, minus his initial purchase price, minus any funding that he has paid so far ($24,000 - $23,000 - $100 = $900). If he does decide to sell his futures contract, this amount will be automatically credited to his balance.
The trader buys a BTC perpetual futures contract for $23,000. One month later, the price of the contract is $22,800. The trader has received a total of $500 in funding. The total profit of the trader, should he decide to sell his futures contract, is the current price of the contract, minus his initial purchase price, minus any funding that he has paid so far ($22,800 - $23,000 + $500 = $300).
Funding-based derivatives (perpetual futures, perpetual options, power perpetuals) are subject to . Funding is an hourly exchange of money between longs and shorts.