KNOWLEDGE / DERIVATIVES

Derivatives

Open Interest, funding, long/short, squeeze and market positioning.

06articles

Derivatives4 min read

Open interest: outstanding contracts, units and interpretation

Volume counts trading activity during a period; open interest measures outstanding contract exposure under the venue's convention. A contract involves a long and a short, so an increase does not by itself reveal which side is better informed. Check whether…

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

Funding rates: payment intervals, crowding and interpretation

Perpetual funding transfers value between sides according to the product's rules and schedule. The displayed rate may be an estimate for the next interval, while a historical record refers to a completed interval. Compare like with like and verify the…

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

Long/short ratios: account counts, exposure and sampling

A long/short account ratio compares counts of accounts classified by position direction. It does not necessarily compare the notional size of long and short exposure. One large account can offset many smaller accounts, and a venue's definition may exclude…

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

Open interest, funding and price: reading a joint scenario

Price direction, open-interest change and funding describe different aspects of the market. Rising price with rising contract exposure may reflect new positioning, while rising price with falling exposure can be consistent with position reduction. Those are…

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

Short and long squeezes: pressure, positioning and timing

A short squeeze describes pressure associated with short positions being reduced or closed as price rises; a long squeeze is the downward counterpart. A large candle alone cannot identify that mechanism. Investigate positioning, liquidation information where…

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.

Derivatives4 min read

Futures basis, contango and backwardation: comparing like with like

In this guide, percentage basis means (futures price/spot price−1)×100. Other markets and sources may use cash minus futures, reversing the sign, so always state the convention. Dated futures have a maturity; perpetual contracts instead use their own…

First, define the context and horizon of the analysis.
Confirm your applications with independent data layers.
Take into account the quality of feed, spread and real cost of execution.