CryptoFacilities: Premium on Forwards doubles to more than 20%

[Pruden]

Hi!

I wonder if any of you follow this derivative exchange. The forwards are similar to futures (there are nuances, though).

The premium on physical had been 8-10% for the last few months. I stopped checking it on June and I have now noticed it has shot up to 20%+. You get 20%/year for shorting it even if price doesn't go anywhere! I'm taking it as a bullish sign.

Anyway, I hope some btc graph sites start following the premium and other data like bfxdata does with Bitfinex stats. 

[Erdogan]

Hi!

I wonder if any of you follow this derivative exchange. The forwards are similar to futures (there are nuances, though).

The premium on physical had been 8-10% for the last few months. I stopped checking it on June and I have now noticed it has shot up to 20%+. You get 20%/year for shorting it even if price doesn't go anywhere! I'm taking it as a bullish sign.

Anyway, I hope some btc graph sites start following the premium and other data like bfxdata does with Bitfinex stats. 

Check out the premium on the help pages. It is something else.

The price of the forward is about 6 USD over the current price on finex at the moment, and it will be cleared at something close to what is the current price in about two monts. The higher price indicates that the forward traders believes bitcoin is going up in the future.

[Pruden]

Thanks for pointing that out. But if you just go to their home page and scroll down, under "The Forward" there is "%Premium" and it's, as I assumed, the Annual Equivalent Rate of the price excess (or discount) until maturity.

What it says in the resources (click on "margining") doesn't make much sense to me. It says that
"We employ a proprietary algorithm to estimate the current Forward premium or discount. This algorithm draws data from various markets that offer to trade instruments on the future delivery of bitcoin."

However, to estimate the premium, wouldn't you have to look at bitcoin spot price rather than other derivative exchanges?  I think it probably means "from various spot markets".

[Erdogan]

Thanks for pointing that out. But if you just go to their home page and scroll down, under "The Forward" there is "%Premium" and it's, as I assumed, the Annual Equivalent Rate of the price excess (or discount) until maturity.

What it says in the resources (click on "margining") doesn't make much sense to me. It says that
"We employ a proprietary algorithm to estimate the current Forward premium or discount. This algorithm draws data from various markets that offer to trade instruments on the future delivery of bitcoin."

However, to estimate the premium, wouldn't you have to look at bitcoin spot price rather than other derivative exchanges?  I think it probably means "from various spot markets".

They use the premium to calculate the margin you have, or the level of collateral you need to have posted. It is different from the bitcoin price, to avoid sell-offs, as in self feeding flash crashes. Anyway it is not needed for your own calculations of profit or loss, so you can largely ignore it. Just look at the price and make up your mind on what it will be weeks or months from now.