Charting Dated Futures Premiums and Cash-and-Carry Opportunities
Summary
This guide explains why dated futures prices tend to converge toward spot as expiration approaches and how traders can capture a futures premium with a cash-and-carry position. Its example pairs a spot Bitcoin purchase with a short futures position, illustrating how convergence can lock in the quoted premium while the account’s value in Bitcoin fluctuates. The discussion assumes the hedge is sized appropriately and held until the premium closes; it does not quantify fees, financing, execution costs, or operational risks.
The article then shows how to chart absolute and percentage premiums in TradingView using composite instrument formulas. It explains why percentage premiums aid comparison across price levels, how a spot exchange can replace a perpetual contract to avoid funding-rate uncertainty, and how to update dated contract symbols. It also describes setting alerts at chosen premium levels. These tools help monitor potential spreads, but a displayed premium alone does not establish a realizable return or account for differences in settlement, liquidity, and trading costs.
Key ideas
- Dated futures generally converge toward spot as expiry approaches, narrowing the basis.
- A spot long paired with a futures short can capture a premium through cash-and-carry, subject to costs and execution.
- Percentage premium charts make spreads more comparable across underlying price levels.
- Using spot data instead of a perpetual contract avoids exposure to the perpetual funding rate in the comparison.
- TradingView composite charts can track premiums and trigger alerts at selected levels.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.