Perpetual Futures vs. Expiry Futures: Maturity and Funding
Summary
This short explanation compares perpetual futures with expiry dated futures, focusing on two structural differences. Expiry futures have a predetermined end date, while a perpetual contract has no scheduled expiry. A perpetual position can therefore remain open indefinitely in principle, provided the trader maintains enough margin to cover losses and avoid liquidation. The text frames margin as a continuing condition for holding the position rather than a feature unique to perpetual contracts.
It also explains funding payments as a mechanism intended to keep perpetual futures from straying far from the underlying spot price. Funding is exchanged between long and short positions, rather than collected by the exchange as its fee. The document provides no formula, funding interval, market example, or evidence about how reliably this mechanism maintains the price relationship. It is a basic conceptual distinction, not a guide to leverage, liquidation calculations, contract specifications, or trading risk.
Key ideas
- Expiry futures have a predetermined maturity date, whereas perpetual futures lack a scheduled expiry.
- A perpetual position may stay open as long as the account maintains sufficient margin against losses and liquidation.
- Funding payments are exchanged between long and short traders to discourage large gaps between perpetual and spot prices.
- The document distinguishes funding transfers from fees collected by an exchange.
- It does not explain funding calculations, liquidation mechanics, or the effectiveness of the price linkage.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.