What are seasonal contracts and perpetual contracts? What is the difference between seasonal contracts and perpetual contracts?

There are two main types of contracts in the field of contract trading: quarterly contracts and perpetual contracts. The delivery date of the current quarter contract is clear, and the underlying asset must be actually delivered when it expires; while the perpetual contract has no delivery date and allows positions to be held indefinitely. The differences between the two are mainly reflected in: delivery, price discovery, leverage effect and funding rate, etc., which are suitable for different trading strategies and investor needs. Quarterly contracts are suitable for short-term trading or hedging, while perpetual contracts are suitable for long-term trading or hedging positions.

What are seasonal contracts and perpetual contracts?

Quarterly Contract

A quarterly contract is a futures contract whose underlying asset is a specific commodity or financial instrument that expires on a specific date. When the contract expires, the buyer must deliver the underlying asset at the contract price, and the seller must deliver the corresponding asset.

Perpetual Contract

A perpetual contract is a futures contract that never expires. It has no specific delivery date, allowing traders to maintain positions indefinitely. Perpetual contracts use a funding rate mechanism to reward long or short positions to prevent the contract price from deviating significantly from the spot price.

The difference between the current quarter contract and the perpetual contract

Delivery

• The current quarter contract: certain The delivery date, when the underlying asset must be delivered.
• Perpetual Contract: There is no delivery date and the position can be maintained indefinitely.

Price Discovery

• Quarterly Contracts: More accurately reflect the spot price of the underlying asset as they approach expiration dates.
• Perpetual contract: Since there is no delivery date, there may be a certain deviation from the spot price.

Leverage

• Perpetual contracts: usually allow higher leverage because they have no delivery date.
• Quarterly contracts: Leverage is usually lower because the underlying asset needs to be delivered at expiration.

Funding rate

• Perpetual contract: Use the funding rate mechanism to keep the contract price consistent with the spot price.
• Quarterly Contract: There is no funding rate mechanism.

Suitable Traders

• Quarterly Contract: Suitable for traders who want to conduct short-term trading or hedging.
• Perpetual Contracts: Suitable for traders who want to make long-term trades or hedge positions.

The above is the detailed content of What are seasonal contracts and perpetual contracts? What is the difference between seasonal contracts and perpetual contracts?. For more information, please follow other related articles on the PHP Chinese website!