How to calculate BigONE contract income

Calculating crypto contract income on BigONE involves understanding contract basics, determining position size, contract multiplier, and initial margin, and monitoring mark and strike prices to determine realized profit or loss.

Nov 25, 2024 at 02:56 pm

How to Calculate BigONE Contract Income

BigONE is a leading global cryptocurrency exchange that offers a wide range of trading products, including spot, futures, and options contracts. If you are interested in trading crypto contracts on BigONE, it is important to understand how to calculate your potential income.

Step 1: Understanding Contract Basics

Before we dive into the calculation, let's quickly review the basics of crypto contracts. A contract is a derivative financial instrument that represents an agreement between two parties to buy or sell an underlying asset (e.g., Bitcoin, Ethereum) at a predetermined price on a future date.

Step 2: Calculating Your Position Size

The position size refers to the amount of the underlying asset you are agreeing to buy or sell. It is usually expressed in units, such as BTC or ETH. For instance, if you open a long position with a position size of 1 BTC, it means you are agreeing to buy 1 Bitcoin at the current market price.

Step 3: Determining the Contract Multiplier

Each contract has a specific multiplier that determines the notional value of the contract. For example, on BigONE, a BTC/USDT perpetual contract has a multiplier of 100. This means that each contract is worth 100 USDT, and a position size of 1 BTC is equivalent to a notional value of 100 BTC.

Step 4: Calculating the Contract Value

The contract value is simply the position size multiplied by the contract multiplier. In our example, if you open a long position with a position size of 1 BTC and a multiplier of 100, the contract value would be 1 BTC * 100 = 100 BTC.

Step 5: Calculating the Initial Margin

The initial margin refers to the amount of capital you must deposit into your trading account to open and maintain a contract position. On BigONE, the initial margin requirements vary depending on the contract and the leverage you are using. You can check the specific margin requirements for each contract on the BigONE website.

Step 6: Monitoring Mark Price vs Strike Price

Mark Price is the current market price of the underlying asset, while Strike Price is the predetermined price at which you agreed to buy or sell the asset. If you are in a long position and the Mark Price is higher than the Strike Price (a profitable position), you can choose to close your position for a profit. Conversely, if the Mark Price is lower than the Strike Price (a losing position), you may need to add additional margin to maintain your position.

Step 7: Calculating Realized Profit/Loss

Your realized profit or loss is determined by the difference between the Mark Price and the Strike Price at the time you close your position. If you close a profitable position, you will receive a profit, which is equal to the difference between the Strike Price and the Mark Price. Conversely, if you close a losing position, you will incur a loss, which is equal to the difference between the Strike Price and the Mark Price.