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Things like BTC swaps don't really have settlement periods: every so and so numbers of often (often 1 or 8), longs pay shorts using some premium formula is swap
by smabie 5y ago
Things like BTC swaps don't really have settlement periods: every so and so numbers of often (often 1 or 8), longs pay shorts using some premium formula is swap > index, and vice verse if swap < index.
I suppose you could construe that as some periodic partial settlement mechanism, though.
- mannykannot 5y agoIs it not that settlement nominally occurs when you choose to exit your position? Which raises various questions about whether whatever stack of turtles your swap is built on can provide liquidity when you need it.
- smabie 5y agoThe order book provides liquidity. When someone sells a swap, someone else buys it. Of course, the amount of liquidity and spread available will depend on how popular the coin or specific contract is.
- mannykannot 5y agoLiquidity has a tendency to dry up when everyone wants it, especially in a highly-leveraged derivative. The fact that options have an expiration date seems to mean that trading cannot just stop when things are going badly.
- anonymoushn 5y agoIt is a periodic partial settlement mechanism. Perpetual futures are equivalent to a bag of daily futures that automatically roll over, one of which is always in its expiry period.