Delta Exchange launches calendar spread trading on bitcoin futures contracts

Digital asset derivatives exchange Delta Exchange has launched calendar spread contracts on Bitcoin futures. In the coming weeks, Delta Exchange plans on adding calendar spread contracts on ethereum and other altcoin futures. 

Bitcoin spread contracts will margin and settle in USDT. Traders can deposit USDT to their accounts or convert BTC to USDT on Delta Exchange to trade these contracts. USDT quoting will allow traders to easily lock in the desired dollar spread, via limit orders, without worrying about the price of Bitcoin.

Calendar spread contracts were designed to allow for simultaneous trading in two futures contracts, on the same underlying asset, with different delivery dates for short and long positions. The launch of Delta Exchange’s new spread contracts will allow traders to trade the price difference between two Bitcoin futures with different maturities. A position in the spread contract is representative of offsetting long and short positions in Bitcoin and thus will not require independent margining.

“Currently, if a trader spots a mis-pricing 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,” says Pankaj Balani, CEO of Delta Exchange. “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.” 

Spread contracts are beneficial in that they do not require traders to manage two different positions but instead a single linked position, which needs less margin. This not only brings capital efficiency but is also cost-effective as the fee for trading spread contracts is lower than that of trading both legs separately. Spread contracts present low-risk opportunities because they involve having a long and a short position on the same asset.