Unit 3 · Level 3 · Futures & perps
Review: contracts with teeth
One unit, two centuries: binding obligations settled daily in cash, a curve whose shape (contango or backwardation) sets the cost of staying in, crypto's expiry-free perp tethered by funding. Under all of it sits the original and noblest use: transferring risk you don't want. Review time.
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What you get asked
Futures vs options, in one line:
The option buyer can walk away, losing only premium; a futures position binds until closed, with daily mark-to-market making every loss immediate.
Rolling a long futures position in contango means buying dearer contracts each month, and the roll ___ compounds quietly.
Curve shape decides what persistence costs. In contango you pay to stay; in backwardation the roll can even work in your favor.
Match the mechanism to its job
Four pieces of plumbing that professionals check on instinct. Now they're yours too.
Crypto perpetuals replace expiry-day convergence with…
No settlement day means the tether must be continuous: the crowded side pays, every eight hours, until price and spot re-embrace.
You hedge a €40,000 index-tracking portfolio with minis of €10,000 notional each. The pro-shaped answer is…
€40,000 ÷ €10,000 = 4 contracts, short. Full protection, zero market upside while it's on. Hedging buys certainty and charges you the rally. 🐜
The rest of this unit
Obligations, basis, funding and hedges: the contracts professionals run on.