Delta Exchange today announced the launch of a new type of contracts, called Calendar Spread Trading, on bitcoin futures.
Delta Exchange is a crypto derivatives exchange offering bitcoin and altcoin futures and options as well as interest rate derivatives on bitcoin and DAI.
The exchange aims to provide a state-of-the-art derivatives trading platform for retail and institutional traders who want to trade in the crypto market.
How the new Delta Exchange Bitcoin futures contracts work
Calendar Spread contracts are designed to allow two futures contracts to be traded simultaneously on the same underlying asset, with different delivery dates for short and long positions.
The launch of these new contracts will allow operators to trade the price difference between two bitcoin futures with different maturities: a position in the spread contract is representative of the netting of long and short positions in bitcoin and therefore does not require independent margins.
These spread contracts do not require traders to manage two different positions, but a single linked position that requires less margin. This not only leads to improved capital efficiency, but is also convenient because the commission for trading spread contracts is lower than for trading both contacts separately.
In the coming weeks, the exchange plans to add Calendar Spread contracts also on Ethereum, and other futures on altcoins. Bitcoin spread contracts will heal and settle in USDT: traders can deposit USDT into their account, or convert BTC into USDT directly on the exchange.
The USDT quote allows traders to easily block the desired dollar spread, thanks to limit orders, without worrying about the price of bitcoin.
The CEO of Delta Exchange, Pankaj Balani, said:
“Currently, if a trader spots a 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. 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”.