Research Summary
The report discusses the futures spreads matrix on Deribit, a tool that allows traders to find and trade futures spreads with ease. It explains how to use the matrix to trade two different futures contracts in opposite directions simultaneously, and how to roll futures positions. The report also highlights the benefits of futures spreads, including better liquidity and convenience.
Key Takeaways
Understanding Futures Spreads Matrix
- Functionality of the Matrix: The futures spreads matrix allows traders to trade two different futures contracts in opposite directions simultaneously. It provides a grid layout of all available futures spreads for a chosen currency.
- Matrix Layout: The columns in the matrix represent the long leg (the future to be bought), and the rows represent the short leg (the future to be sold). The columns represent the future with the longest time to expiry, and the rows represent the future with the shortest time to expiry.
Trading with the Futures Spreads Matrix
- Trading Process: To trade a spread, traders can click anywhere in the frame of the desired spread. This brings up the order book for the futures spread, where traders can either trade into one of the orders resting in the order book or leave a limit order at their chosen price.
- Example of a Trade: The report provides an example of buying a spread between the June ’24 future and the March ’24 future. The trader buys into the best ask of 416 with a quantity of 100, resulting in buying $100 of the June future and selling $100 of the March future.
Managing Individual Legs and Rolling Futures Positions
- Managing Individual Legs: Even though a transaction is executed using a single order, the positions are separate and can be traded separately. For instance, if a trader no longer wishes to be long on a future, they can sell this position back into the market.
- Rolling Futures Positions: The report explains how to use a futures spread to roll a futures position from one future to another. This involves buying back the future that the trader is currently short on and selling the future they wish to roll their position to.
Benefits of Futures Spreads
- Convenience and Liquidity: Futures spreads offer a convenient way to trade two futures with a single order. The futures spread order books often have better liquidity than trading in the individual order books. The futures spreads matrix provides a simple way to view all futures spreads at once and find the desired one.
Actionable Insights
- Utilize the Futures Spreads Matrix: Traders should leverage the futures spreads matrix on Deribit to simplify their trading process. The matrix allows for simultaneous trading of two different futures contracts in opposite directions.
- Consider Futures Spreads for Better Liquidity: Traders looking for better liquidity might find futures spreads a viable option. The futures spread order books often offer better liquidity than individual order books.
- Explore Rolling Futures Positions: Traders can use futures spreads to roll their futures positions from one future to another. This strategy can be particularly useful when a future is about to expire and the trader wants to maintain a short futures position.
