Bitcoin Cash and Carry: Hedging Futures Basis to Expiry

Summary

This document explains a Bitcoin cash and carry trade: buy spot BTC and sell a same-sized futures contract priced above spot. The paired positions are intended to hedge directional exposure and earn the futures premium as it converges toward the index settlement price near expiry. It describes closing early if the basis reaches zero or turns negative, and rolling into a later futures contract while keeping the spot holding.

An example trade and a stated annualized return illustrate the approach, while the article also outlines how to place the spot and futures orders. The return and premium are market-dependent snapshots, not guarantees. The description’s claim of price-risk elimination and low risk should be treated cautiously: execution costs, basis changes before exit, collateral and funding requirements, settlement differences, and operational risks can affect realized outcomes. The article is informational and says it is not a trading recommendation.

Key ideas

• A cash and carry trade pairs a long spot position with a short futures position of matching size.
• The intended return comes from the futures premium converging toward spot at expiry.
• The position can be closed early when the basis narrows or rolled into a later contract.
• The quoted return is market-specific, and practical costs and risks can change realized results.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.