- Introduction to Bybit futures contracts
- Why invest in Bybit’s futures contracts?
- Conditions of Bybit futures contracts
- Handling fee for Bybit’s futures contracts
- Delivery fee for Bybit’s futures contracts
- Profit and loss calculation for futures contracts
- What is the marked price of a futures contract?
- Index price of Bybit’s futures contracts
Introduction to Bybit futures contracts
Bybit futures contracts, also known as Bybit futures, refer to agreements to trade (buy or sell) a particular digital currency at an expected price at a specific point in the future. They are a type of derivative product.
Let’s take Bitcoin as an example to illustrate the concept of futures contracts:
Buyers and sellers sign an agreement to trade 5 bitcoins at a price of $20,000 on December 31, 2020.
On the delivery day, the seller is obliged to sell 5 bitcoins at a price of $20,000, regardless of the market transaction price of bitcoins at that time.
Similarly, the buyer is obligated to buy 5 bitcoins at a price of $20,000 on that day, regardless of the market transaction price of bitcoins at that time.
Buyers and sellers can also choose to close their positions before the delivery date.
Similar to the Bybit perpetual contract, the contract value of Bybit futures contracts is calculated in U.S. dollars, and Bitcoin is used to settle profits and losses.
For example, if the current price of BTCUSD is $10,000, buying a long position of 20,000 contracts is equivalent to holding a long position of 2 BTC.
Go to Bybit’s Official Website
Why invest in Bybit’s futures contracts?
- Shared margin with the BTCUSD perpetual contract
- You only need one BTC account to trade between the perpetual contract and the futures contract.
- Shared insurance fund with the BTCUSD perpetual contract
- In Bybit, the insurance pool of the futures contract and the BTCUSD perpetual contract are shared.
- Switch between one-way or two-way holding mode
- Users can switch between single or two-way holdings. In two-way holding mode, using the full position mode allows you to achieve perfect hedging.
- No funding rate
- You do not need to pay or receive any funding fees for holding positions.
Conditions of Bybit futures contracts
| Contract value: | 1 contract is equal to 1 USD |
|---|---|
| Delivery type: | Bitcoin is used for cash delivery |
| Handling fee: | 0.075% for the withdrawer and -0.025% for the provider |
| Forced liquidation: | Use the marked price to trigger the liquidation. However, please note that between 07:30:00 and 08:00:00 UTC on the delivery day, when the market price or the expected delivery price reaches a certain threshold, the system will trigger a liquidation. |
| Highest Bid Price: | Latest Market Price * (1+5%) |
| Lowest Selling Price: | Latest Market Price * (1-5%) |
| Futures contract expiry time: | 08:00:00 UTC on the day of delivery |
| Delivery fee: | 0.05% |
Find out more about Bybit’s Futures Contracts
Handling fee for Bybit’s Futures Contracts
When using the Bybit platform to conduct futures contract transactions, users must pay attention to handling fees and delivery fees.
When a trader manually places an order to open and/or close a position in the futures contract, the transaction fee will adopt the same liquidity extractor fee and liquidity provider reward structure as the perpetual contract.
At 08:00 UTC on the delivery day, the system will automatically deliver all open positions and charge a delivery fee of 0.05%.
Delivery fee for Bybit’s Futures Contracts
All futures contracts have an expiration date, also known as the delivery date.
Based on the characteristics of the product, all positions must be closed on the specified delivery date.
Therefore, if a trader does not manually close the position, the system will automatically close the position on the delivery day.
During this process, the platform will charge a 0.05% delivery fee.
For example, a trader uses a limit order to buy a BTCUSD contract with a quantity of 10,000 at a price of $8,000, using a 25x leverage quarterly futures contract, and the expiration date is 08:00 UTC on December 25, 2020.
Additionally, the market for BTCUSD continues to be bullish, and the trader decides not to manually close the position.
At 08:00 UTC on December 25, 2020, the system will automatically close the trader’s position, and the estimated delivery price at that time was $10,600.
The delivery fee to be paid by this trader will be:
Delivery fee = Contract value x 0.05% = (10,000/10,600) x 0.05% = 0.00047169 BTC
Go to Bybit’s Official Website
Profit and loss calculation for futures contracts
The open and settled profit and loss of the delivery contract are calculated using the same formula as the perpetual contract.
By default, all prices used to close positions before the delivery date are based on Bybit’s latest market price (market price).
If the position has not been closed, at 08:00:00 UTC on the delivery day, the system will automatically close the delivery position.
However, the delivery price is determined by the average index prices per second from 07:30:00 UTC to 08:00:00 UTC, instead of using the buy/sell price in the order table.
What is the marked price of a futures contract?
Similar to the perpetual contract, the futures contract also includes the latest market price (LTP) and the marked price (MP), which form a double set of price mechanisms in Bybit.
The forced liquidation of the futures contract is also triggered by the marked price.
Compared with the reverse perpetual contract, due to the lack of a funding rate mechanism, the calculation of the marked price of the futures contract adopts a different logic.
For the futures contract, the market price is calculated by referring to the global spot index price and adding the basis rate.
Marked price = index price x (1 + basis rate)
Basis rate = 10-minute moving average of [(depth-weighted middle price – index price) / index price]
Depth-weighted middle price = (depth-weighted bid price + depth-weighted selling price) / 2
Depth-weighted bid price = average transaction price considering the impact of long-buying margin
Depth-weighted selling price = average transaction price considering the impact of short-selling margin
- The depth-weighted middle price is updated every second.
- The margin impact of the futures contract is 10 BTC.
- If the futures contract is newly launched and has been online for less than 10 minutes (e.g., 2 minutes), the system will calculate the basis rate with a 2-minute moving average.
- The basis rate reflects the premium or discount of the depth-weighted middle price compared to the index price.
- If the basis spread is widening, it means that the spread between the price of the futures contract and the index price is widening.
- If the basis spread is shrinking, it means that the price difference between the price of the futures contract and the index price is shrinking.
- Unlike other contracts, between 07:30:00 and 08:00:00 UTC on the delivery day, when the marked price or the expected delivery price reaches a certain threshold, liquidation will be triggered.
Trade Futures Contracts with Bybit
Index price of Bybit’s futures contracts
Similar to the perpetual contract, the index price of the futures contract is also calculated with reference to the prices provided by several major exchanges.
Index price x (1 + basis rate) = marked price, which is the reference price that triggers the liquidation of the futures contract.
If the user continues to hold positions from 07:30:00 UTC to 08:00:00 UTC on the delivery day (30 minutes before the delivery time of 08:00:00 UTC), the contract’s outstanding profit and loss will use the average index price instead of the latest market price for calculation.
On the delivery day, the system will automatically deliver all outstanding futures contract positions.
However, please note that the delivery is no longer based on the delegated list price for opening a buy/sell position, but it is determined by the average index price per second from 07:30:00 UTC to 08:00:00 UTC.
The expected delivery price will only appear from 07:30:00 UTC to 08:00:00 UTC on the delivery day.
It represents the change in the average index price per second from 07:30:00 UTC to the current average index price.
Go to Bybit’s Official Website
Please check Bybit official website or contact the customer support with regard to the latest information and more accurate details.
Bybit official website is here.
Please click "Introduction of Bybit", if you want to know the details and the company information of Bybit.
Comment by Hans
April 24, 2024
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