FUTURES AND MARGIN TRADING Flashcards
(21 cards)
SPOT
Spot Market: trading asset for immediate delivery and settlement.
FUT
Futures Contract: agreement to buy/sell an asset at a set price on a future date.
PERP
Perpetual Contract: a futures-style derivative with no expiry, kept in line with spot via funding.
OI
Open Interest: total number of open futures contracts—indicator of market participation.
Basis
Difference between futures price and spot price; positive = contango, negative = backwardation.
Contango
When futures prices trade above expected future spot price (upward-sloping curve).
Backwardation
When futures prices trade below expected future spot price (downward-sloping curve).
IMR
Initial Margin Requirement: collateral needed to open a new futures position.
MMR
Maintenance Margin Requirement: minimum collateral to keep a position open—falling below triggers liquidation.
Margin Call
Demand for additional collateral when margin falls below maintenance level.
Leverage (×)
Ratio of borrowed funds to your capital (e.g., 10×): amplifies gains and losses.
Cross Margin
Uses your entire account balance to back positions—profits can offset losses but risk full balance.
Isolated Margin
Margin allocated to one position—only that collateral is at risk if liquidated.
Liquidation Price
Price at which margin falls below MMR and the position is auto-closed.
Funding Rate
Periodic payment between longs/shorts on perpetuals to tether price to spot.
Mark Price
Reference price for PnL and liquidation triggers—designed to avoid manipulation.
PnL
Profit & Loss: unrealized or realized gains/losses on a position.
ROE
Return On Equity: PnL as a percentage of allocated margin.
CFD
Contract for Difference: derivative to speculate on price moves without owning the asset.
COIN-M / USDT-M
Futures settled in crypto (Coin-Margined) or in USDT (USDT-Margined).
ADL
Auto-Deleveraging: winning positions are reduced to cover under-collateralized ones in extreme stress.
