ErisX Introduces Cash Contracts to Enable Short Positions in Crypto and Protect Against Market Volatility

ErisX is excited to introduce a suite of bounded futures contracts that provide an innovative approach to fully funded contracts and efficiently enable short positions in crypto futures. Bounded futures are cash-collateralized and protect position holders against large price movements in the underlying. Depending upon the difference between the trade price and a contract’s boundary, the capital required may be lower than other crypto futures contracts. These contracts are collateralized and settled in cash allowing members to gain exposure to this asset class who may otherwise be restricted from directly holding crypto assets.

The bounded futures will have the same trading hours as the ErisX physically delivered futures.

Example using Bitcoin

Let’s look at an example of a trade, the collateral required and what the payout of those positions may look like at expiry.

Using a Bitcoin Bounded Futures contract with the following parameters.

A member sends an order to Buy 10 contracts and is filled in the ErisX central limit order book at the price of $10,000.

The collateral required from each side is calculated according to the specification described above:

If these positions we held to expiry the long and short profit or loss profile of each side would look like this.

You can see that if the contract moves a long way from the original trade price each side has protection built into the contract which limits their exposure.

Clearing

Bounded futures are cleared at Eris Clearing, the clearing and settlement arm of ErisX. Eris Clearing is a CFTC-licensed Derivatives Clearing Organization and operates in accordance with a CFTC approved rulebook and employs an extensive KYC/AML program to protect Members from fraud and market manipulation.

Conclusion

Watch a video about ErisX’s bounded futures products.

ErisX has expanded its product base to include bounded futures. We have taken into consideration the demands from traders and intermediaries who prefer cash collateralized contracts. If you would like more information about our suite of bounded futures, please visit ErisX.com.