Crypto Transaction Types: Spot, Margin, Futures, Perpetuals, and Options
Summary
The document introduces common cryptocurrency transaction types and explains how exposure differs across them. Spot trading involves buying or selling the underlying asset without borrowing. Margin trading uses borrowed funds to increase position size, amplifying both potential gains and losses. Futures provide price exposure without direct ownership: expiry contracts settle on a specified date, while perpetual futures have no expiry and require sufficient margin to keep positions open.
For perpetuals, the article explains that funding payments pass between long and short holders and are intended to discourage contract prices from straying too far from spot. It also defines options as contracts granting the right, but not the obligation, to buy or sell at a strike price by a specified date; their value depends on factors including the underlying price and time to expiry. This is a basic conceptual overview, not a trading method. It does not cover contract-specific mechanics, margin rules, pricing models, or quantify risks, and its broad claim that the derivatives all involve borrowing or leverage may not apply uniformly to every product.
Key ideas
- Spot trades exchange the underlying crypto asset without leverage or borrowing.
- Margin trading borrows funds to enlarge exposure, increasing the scale of possible losses as well as gains.
- Expiry futures provide price exposure with a settlement date, while perpetual futures have no expiry.
- Perpetual funding payments are exchanged between contract holders to help keep futures prices near spot.
- Options give the holder a right to trade at a specified strike by a stated date, without requiring exercise.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.