Development history of extended contract
Deferred contracts evolved from early options. An option allows the holder to exercise the option on a specific date within the validity period of the option. For example, the expiration date of an option can be three years, but it can only be exercised in the last month of each year within three years. Its application is usually related to the fixed income market. The exercise period of an extended contract is usually 24 hours, which greatly shortens the exercise period. In addition, the deferred contract also has the transaction characteristics of perpetual contract, which is settled according to the agreed time limit and not delivered.
Trading mechanism
Extended contracts are divided into off-site contracts and on-site contracts. Over-the-counter transactions are generally reached by both parties to the transaction.
Basic assets (basic assets)
Each contract has an underlying asset, which can be any of many financial products, such as common stock, stock index, futures contract, bonds and so on. It can make the buyer of the contract lock the risk in a certain range. In essence, the extension contract is to price the rights and obligations in the financial field separately, and exercise the rights of the counterparty within the specified time, which the debtor must perform.
trading hour
The extended contract has flexible transaction settlement time. Different from stock market, spot market and futures market, it adopts agreed trading time. For example, contracts can be settled at different times, such as 1 hour, 4 hours, one week and one month.
Principle of extended contract
Deferred contracts are different from other financial products such as futures, stocks and spot. It is mainly based on the trend (up or down) of the order price per unit time, and the profit and loss are not calculated by the price difference, and like the perpetual contract, there is no need for delivery. Profitability depends only on whether the order price meets the predetermined conditions. Simply put, the core of an extended contract is the future trend of one or more transaction targets. Investors do not need to actually buy or own assets, but only need to predict the trend of asset changes. There are only two outcomes of maturity, based on whether the closing price of the asset is lower or higher than the price at the time of buying the target within a specified time (for example, in the next 24 hours), that is, traders only need to choose the direction of price change. Regardless of other factors, the price of the underlying asset is rising or falling.