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Perpetual futures are so nice compared to regular tradfi ones. Having to roll over your ES or NQ futures serves no purpose (and it's not like any other future b

by smabie 3y ago

Perpetual futures are so nice compared to regular tradfi ones. Having to roll over your ES or NQ futures serves no purpose (and it's not like any other future besides the front month is liquid anyways) and is probably just a scam by CME to induce more trading volume. That being said regular futures do make sense for stuff like commodities.

hsjqllzlfkf 3y ago
I find it super helpful that cryptobros invented their own lingo. That's because that way, when I get emails from recruiters being mysterious and using words like "tradfi", I know I can safely ignore.
RileyJames 3y ago
Doesn’t that beg the question? Why hasn’t a platform capitalised on the perpetual future in tradfi markets. I can understand why CME might not. But why wouldn’t a new entrant like robinhood launch perpetual futures?
- polygamous_bat 3y ago
  Because perpetual future doesn't make sense for a lot of things people trade futures for: corn, soybean, crude oil. They have physical presence and in some cases an expiry date. There are futures for other financial instruments or indexes where it might make more sense, but there the use of futures is more about hedging than owning the underlying, since it's not as complicated as owning your own crypto and keeping it safe.
  - charlieyu1 3y ago
    Well it actually makes sense, production is often continuous, most producers just want to hedge some risk due to price fluctuations over the time, they have no interest in physical delivery because it is often expensive.
- vgatherps 3y ago
  One answer here is that with dated rates products (I.e. all futures and options, not to mention spot ficc) is * pricing is well understood * shares similar risks across all products If you add an ES perp, that might be a fine instrument in isolation, but it behaves totally differently than most other rates instruments so might be hard to fit into a portfolio than dated futures that you roll. I ran a trading desk in the past that did both dated and perpetual products and this was a major point of focus.
- yareally 3y ago
  The liquidity would be terrible and all retail trading. Most CME futures are bought and sold by Market Makers, not us retail little guys. The liquidity on Nasdaq (NQ) or S&P (ES) futures are so impressive that I can put in a sell stop order with a limit of only 1 tick from the stop and it will always fill outside of major market events.
polygamous_bat 3y ago
Perpetual futures make sense for crypto because it has no physical presence and arguably no real uses beyond speculation. For commodities, for most of which finance and more specifically futures conrracts are really a secondary tool to smoothen the real world use cases, expiry and delivery etc. is a feature and not a bug.
- vgatherps 3y ago
  Index futures are among the most liquid and highly traded instruments and have no natural expiries, a perpetual might make sense. There is a direct correspondence between the rates component of the index futures and all other naturally expiring instruments (options, bonds, commodity futures) so there’s an angle of “yet another weird rates product everyone has to care about” if you add perps.
- saurik 3y ago
  I might have thought that, but the article says they were invented by actual real-world metal miners to solve a problem on the Chinese Gold and Silver Exchange.
charlieyu1 3y ago
The oil future prices drop to negative in an exchange in 2020. Funds rolling over the contract in subsequent months also took a big loss for rolling over contracts because price disparity in different months. Perpetual futures would eliminate such risks.
- doubleg72 3y ago
  The facts regarding crude futures dropping to negative a day in 2020 are actually more to do with the fact every bit of storage in the US was full. The companies closing contracts were hedged by this point anyways, as demand had all but dried up completely. Perpetual futures would go against the entire point of having contacts for specified length of time. That point is time itself, the other major variable in finance.
  - hed 3y ago
    The SPR wasn't full; I wish we would have filled it up.
  - 2Gkashmiri 3y ago
    I was on hn or reddit and I wished someone would buy an oil tanker for like $1 and sell for -1 if possible but for a brief period, I'd have owned a freaking oil tanker. Sadly couldn't convince anyone. Sad sad really. It could've been a nice story today.

by smabie 3y ago

hsjqllzlfkf 3y ago

I find it super helpful that cryptobros invented their own lingo. That's because that way, when I get emails from recruiters being mysterious and using words like "tradfi", I know I can safely ignore.

RileyJames 3y ago

Doesn’t that beg the question? Why hasn’t a platform capitalised on the perpetual future in tradfi markets. I can understand why CME might not. But why wouldn’t a new entrant like robinhood launch perpetual futures?

polygamous_bat 3y ago
Because perpetual future doesn't make sense for a lot of things people trade futures for: corn, soybean, crude oil. They have physical presence and in some cases an expiry date. There are futures for other financial instruments or indexes where it might make more sense, but there the use of futures is more about hedging than owning the underlying, since it's not as complicated as owning your own crypto and keeping it safe.
- charlieyu1 3y ago
  Well it actually makes sense, production is often continuous, most producers just want to hedge some risk due to price fluctuations over the time, they have no interest in physical delivery because it is often expensive.
vgatherps 3y ago
One answer here is that with dated rates products (I.e. all futures and options, not to mention spot ficc) is * pricing is well understood * shares similar risks across all products If you add an ES perp, that might be a fine instrument in isolation, but it behaves totally differently than most other rates instruments so might be hard to fit into a portfolio than dated futures that you roll. I ran a trading desk in the past that did both dated and perpetual products and this was a major point of focus.
yareally 3y ago
The liquidity would be terrible and all retail trading. Most CME futures are bought and sold by Market Makers, not us retail little guys. The liquidity on Nasdaq (NQ) or S&P (ES) futures are so impressive that I can put in a sell stop order with a limit of only 1 tick from the stop and it will always fill outside of major market events.

polygamous_bat 3y ago

Perpetual futures make sense for crypto because it has no physical presence and arguably no real uses beyond speculation. For commodities, for most of which finance and more specifically futures conrracts are really a secondary tool to smoothen the real world use cases, expiry and delivery etc. is a feature and not a bug.

vgatherps 3y ago
Index futures are among the most liquid and highly traded instruments and have no natural expiries, a perpetual might make sense. There is a direct correspondence between the rates component of the index futures and all other naturally expiring instruments (options, bonds, commodity futures) so there’s an angle of “yet another weird rates product everyone has to care about” if you add perps.
saurik 3y ago
I might have thought that, but the article says they were invented by actual real-world metal miners to solve a problem on the Chinese Gold and Silver Exchange.

charlieyu1 3y ago

The oil future prices drop to negative in an exchange in 2020. Funds rolling over the contract in subsequent months also took a big loss for rolling over contracts because price disparity in different months. Perpetual futures would eliminate such risks.

doubleg72 3y ago
The facts regarding crude futures dropping to negative a day in 2020 are actually more to do with the fact every bit of storage in the US was full. The companies closing contracts were hedged by this point anyways, as demand had all but dried up completely. Perpetual futures would go against the entire point of having contacts for specified length of time. That point is time itself, the other major variable in finance.
- hed 3y ago
  The SPR wasn't full; I wish we would have filled it up.
- 2Gkashmiri 3y ago
  I was on hn or reddit and I wished someone would buy an oil tanker for like $1 and sell for -1 if possible but for a brief period, I'd have owned a freaking oil tanker. Sadly couldn't convince anyone. Sad sad really. It could've been a nice story today.