Crypto Jack Explains How to Cash In With Dated Futures. Traders can use dated futures to lock in profits, hedge exposure to an asset, create low-risk yield trades, or aggressively speculate on an asset's price using leverage.
Crypto Jack is a product manager at EQONEX, and he wants to tell you all about dated futures.
A dated futures contract is an agreement to buy an asset at a specific price in the future. Usually at the end of the next quarter, or sometimes a little further.
This is excellent news if the Bitcoin price rises, but it could be costly if it falls because you're still obliged to trade at the higher pre-arranged price.
Dated futures can lock in profits, hedge exposure to Bitcoin, and structure low-risk yield trades. Traders can aggressively speculate on the price of Bitcoin using leverage.
EQONEX contracts are physically delivered, so you'll still hold Bitcoin after settlement, which is great for basis traders, hedges, or anyone that wants to keep their Bitcoin exposure open after the contract settles.
Because of settlement at expiry, futures prices are expected to get closer to spot prices as settlement approaches. And, as you're trading now, you don't need to have all of the cash for the transaction until the settlement date.
You can trade contracts with leverage, and the price tends to get driven up as speculators come in and buy them. This is known as contango, which means that the further away from the contract's expiry date, the higher the price of that contract.
Dated Futures allow for a very low-risk yield or basis trade where you buy the spot short in the future and lock in a profit if held to expiry.
On the EQONEX Exchange, you can trade Dated Futures in your Main Account or any Sub Account once you enable cross collateral and negative balances.
With cross collateral and negative balances enabled, you can trade Dated Futures with 125 times leverage, so you'll need to have enough cash in your account to buy Bitcoin if you're long or enough Bitcoin to deliver if you're short. Or else you risk liquidation.
The advantage of this is that the date of futures contract will automatically close out any offsetting spot position. A great opportunity for basis traders, whose basis trades will be automatically closed at expiry, without any slippage or execution risk.
Because of the physical settlement, EQONEX has introduced a delivery margin to ensure that you have enough assets in your account to make the settlement at the expiry of the contract. Your margin requirement will increase by three percent a day for each of the seven days before the end of the contract.
Suppose you're trading these contracts with significant leverage as expiry approaches. In that case, you'll need to reduce your position size or post additional margin to reduce your leverage or roll your futures position to a later expiry, or else you'll risk liquidation.
Dated Futures is the latest EQONEX Exchange product that brings familiar and traditional trading strategies to crypto.
Unlike buying and holding, trading perps lets you participate in the market right away without having to take custody of the underlying asset and with only a fraction of the capital needed to purchase an asset outright.
Cryptocurrencies are highly volatile, meaning that their prices fluctuate continuously, and often dramatically, all the time. For some traders, this is an opportunity not to be missed.
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