Difference 2: If both contracts are discounted and the basis is negative, then the USDT margin contract is more conducive to liquidation.
Difference 3: sell open currency standard margin contract and buy open USDT margin contract to maximize asset utilization and leverage.
Specific situation
Price difference 1: If both contracts are premium and the basis difference is positive, then the currency-based margin contract will be more conducive to opening positions.
OKEX is the only exchange that supports both kinds of margin contracts. The above two BTC contracts are based on BTC and USDT respectively. Assuming that there is 10000 USD to invest, you can buy BTC with a value of 10000 USD and sell BTC contracts with an open position of 10000 USD. The question is, what kind of contract should you sell? If you choose BTC margin contracts, buy BTCs with a value of 10000 USD, and use these BTCs as margin to sell open contracts, in essence, you will never be forced to close your positions because of the income structure of currency-based margin contracts.
Difference 2: If both contracts are discounted and the basis is negative, then the USDT margin contract is more conducive to liquidation.
Use USDT margin contract to establish the opposite position (that is, buy multiple contracts and sell the spot). Sell BTC spot on OKEX platform and get USDT. You can use these USDT 1: 1 to open multiple contracts. In essence, you will not be forced to close your position until the market price drops1-and the margin rate is maintained.
Difference 3: sell open currency standard margin contract and buy open USDT margin contract to maximize asset utilization and leverage.
Assuming that 1 USDT = 1 USD, the difference between 1 and 2 explains why the price of usdt margin trading contracts is often higher than that of currency-based margin trading contracts. When funds are insufficient, users can choose to use the spread of two contracts for arbitrage. For example, when the demand for USDT margin contract is lower than another contract, the basis of currency-based margin contract is slightly higher. At this point, users can buy more USDT margin contracts and sell another one. Because there is no need to buy or sell the spot, users can get higher returns by increasing the trading leverage (it is necessary to pay close attention to market fluctuations to prevent one of the contracts from being exploded). It can be seen that OKEX's unique USDT margin contract provides more arbitrage opportunities for traders.
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OKEX's unique two different margin contracts create more different kinds of arbitrage trading opportunities for traders. It can not only realize implied interest rate arbitrage between contracts, but also realize spot and arbitrage between different margin contracts. From the perspective of improving risk management and control, we find that the risk of short selling money-based margin contracts is lower than that of USDT margin contracts (and vice versa). Finally, users can use two contract combinations to hedge the risk of tether exposure. To sum up, OKEX has the best risk control and the most trading opportunities among all exchanges.
On February 12, the market was in the futures premium, and the contract price was about 5% higher than the spot price. In trading terms, we usually call it "trading wealth". A month later, on March 13, the market turned to spot premium, and the lowest contract price in the current season was about-15%, which is what we call "cheap transaction". If you buy the spot in February 12, sell the short premium contract, and sell the spot in March 13, and buy the flat discount contract, the income from holding positions this month will be as high as 20%. This is a very simple index arbitrage strategy, but often the details determine success or failure.
Maximize the utilization rate of assets and maximize the income. It is almost impossible to seize the best opportunity to get all 20% of the income. Because it is impossible to accurately predict the basis difference and know the timing of opening or closing positions, how can we operate to maximize the income of unit assets and minimize the risk?