By
Bena Ilyas
April 22nd, 2024
Futures trading offers an abundance of possibilities for traders including leveraged trading, speculation, and the ability to create strategies that offer uncorrelated returns to the general market.
Singapore-based Delta Exchange, a digital asset derivatives exchange, announced today the launch of the calendar spread contracts on Bitcoin futures.
In the coming weeks, Delta Exchange plans on adding calendar spread contracts on Ethereum but also on other altcoin futures. Bitcoin spread contracts will margin and settle in USDT. That means that traders will be able to deposit USDT to their accounts or convert BTC to USDT on Delta Exchange to trade these contracts. USDT quoting will allow traders to easily lock in the desired dollar spread, via limit orders, without worrying about the price of Bitcoin.
According to the announcement sent to Coinspeaker, calendar spread contracts were designed to allow for simultaneous trading in two futures contracts, on the same underlying asset, with different delivery dates for short and long positions. The launch of Delta Exchange’s new spread contracts will allow its users to trade the price difference between two Bitcoin futures with different maturities. A position in the spread contract is representative of offsetting long and short positions in Bitcoin and thus will not require independent margining.
Highly Correlated Futures
Pankaj Balani, CEO of Delta Exchange said that right now if a trader spots mispricing between longer maturity and shorter maturity futures and wants to take a position on the calendar spread, they would have to take a position in both these futures separately and margin for them separately.
He added:
“Since both the futures are on the same underlying asset, they are highly correlated, which means that the losses in one position are offset by gains in another. This reduces the margin requirement and that benefit is passed on to the customers.”
Spread contracts are advantageous in that they do not require traders to manage two different positions but instead a single linked position, which needs less margin. This not only brings capital efficiency but is also cost-effective as the fee for trading spread contracts is lower than that of trading both legs separately. Spread contracts present low-risk opportunities because they involve having a long and a short position on the same asset.
Delta Exchange is a leading cryptocurrency derivatives exchange. The exchange offers Bitcoin and Altcoin futures, Bitcoin and Altcoin options, and interest rate linked derivatives on Bitcoin and DAI. The company has one of the most advanced product offerings in the cryptocurrency derivatives space and its mission is to provide state of the art derivatives trading-platform for retail and institutional traders to participate in crypto derivatives markets.
Abundance of Possibilities
Futures trading offers an abundance of possibilities for traders including leveraged trading, speculation, and the ability to create strategies that offer uncorrelated returns to the general market. The reasons for traders to utilize spread contracts are many. Spread trades allow you to profit despite market direction. They consist of two underlying futures contracts which are leveraged products, meaning you are only required to deposit into your account a minute percentage of the total value of your trade. They also make trading accessible to all; low minimum trade sizes and transactional costs are popular with both retail and professional traders.
Spread trades reduce volatility and systemic risk, when external events move the market, both legs of the spread trade are often affected equally, thus volatility and explosiveness are diminished compared to trading outright prices.
Bitcoin spread contracts will margin and settle in USDT allowing traders the ability to deposit USDT to their accounts or convert BTC to USDT on Delta Exchange to trade these contracts.