Futures Swaps are referred to by various names; futures spreads, calendar spreads, basis etc. At the end of the day, they represent the price differential between two different futures (or a perpetual swap and a future). Trading the instrument means you are buying one leg and selling the other.
Trading Futures Swaps on Alpha5 can be done in a single-click, via a single instrument.
None of the larger exchanges offer this instrument, though the benefits include:
No price-execution risks
Easy rolling of positions
Increased liquidity and interest driven to the basis markets
Reduced transaction costs
Increased liquidity to futures markets
It’s important to understand that a Futures Swap is a ‘look-through’ instrument. Though you trade the instrument, your risk is reflected as two separate legs (either a future + future or future + perpetual swap). All risk management and margin management is done at the individual leg level. This leads to a simplified interface.
XBTUSD is trading at $10,000/$10,001. XBTJun is trading at $10,500/$10,501. The XBT-Jun Swap is auto-populated (via implied orderbook logic) to create a market of -$501/-$499. If a trader purchases the 5000 contracts of XBT-JunSwap at $499, they will have created positions of: +5000 contracts in XBTUSD -5000 contracts in XBTJun This means as the price converges between the two, he/she stands to profit. If at some point the trader thought Bitcoin as a whole was going to outperform, he/she would simply close out the -5000 XBTJun by buying it back, and their position would be just long +5000 XBTUSD. Once a trade is executed through the Futures Swap, the normal rules & guidelines for futures and perpetual swap apply and they are managed on a separate basis.
|Underlying Index||A5XBT Index|
|Symbol||Contract1 - Contract2|
|Contract Size||1 USD|
|Price Quotation||US Dollars per 1 BTC|