How to calculate LBank contract income

To calculate contract income on LBank, determine the contract size, premium, and position value; monitor the mark price; track unrealized and realized PnL; and finally, close the position to realize the profit or loss.

Nov 27, 2024 at 10:03 am

How to Calculate LBank Contract Income

LBank is a centralized cryptocurrency exchange that offers various trading products, including spot, futures, and options contracts. Users can earn income by trading these contracts, and the calculation of contract income involves understanding the following key concepts:

1. Contract Specifications: Before calculating income, you must familiarize yourself with the contract specifications, such as the contract size, multiplier, and premium. The contract size specifies the underlying asset amount represented by each contract, while the multiplier enhances the contract's value. Premium refers to the difference between the spot price and the futures price in futures contracts.
2. Position Value: Your position value represents the current value of your open contract. It is calculated by multiplying the contract size by the current market price of the underlying asset. If you hold a long position, a price increase will increase your position value, while a price decrease will decrease it. Conversely, for a short position, a price decrease will increase your position value, and a price increase will decrease it.
3. Mark Price: The mark price is an index price calculated by LBank based on market data and serves as the reference price for liquidations and settlements. It aims to minimize the impact of extreme price movements on traders and prevent price manipulation.
4. Unrealized Profit and Loss (PnL): Unrealized PnL represents the difference between your entry price and the current market price. It is calculated in real time and reflects the potential profit or loss that would be realized if you were to close your position at the current market price.
5. Realized Profit and Loss (PnL): Realized PnL refers to the actual profit or loss incurred when closing a contract. It is calculated by subtracting your entry price from your exit price and factoring in any applicable fees.

Calculating Contract Income:

To calculate your contract income, follow these steps:

1. Determine Position Value: Determine your position value by multiplying the contract size by the current market price of the underlying asset.
2. Calculate Unrealized PnL: Calculate the difference between your entry price and the current market price, multiplied by the contract size. If the result is positive, you have an unrealized profit; if negative, you have an unrealized loss.
3. Realize Profit or Loss: Close your position to realize your profit or loss. Your profit will be credited to your account, while your loss will be debited.
4. Calculate Realized PnL: Calculate your realized PnL by subtracting your entry price from your exit price and factoring in any applicable fees.

Example:

Suppose you open a long position on a BTC-USDT futures contract with a contract size of 1 BTC at an entry price of $20,000. The current market price is $20,500:

• Position Value = 1 BTC * $20,500 = $20,500
• Unrealized PnL = ($20,500 - $20,000) * 1 BTC = $500
• If you close the position at the current market price:
• Exit Price = $20,500
• Realized PnL = ($20,500 - $20,000) * 1 BTC - Fees = $495 (after deducting fees)