What are quarterly futures contracts?

Understanding Quarterly Futures Contracts

Quarterly futures contracts are standardized agreements to buy or sell an asset—such as a cryptocurrency—at a predetermined price at a specific date that aligns with the end of a calendar quarter. These quarters typically end in March, June, September, and December. Unlike perpetual contracts that have no expiration date, quarterly futures have a fixed maturity, which makes them suitable for traders seeking defined timeframes for hedging or speculation.

These contracts are widely used in crypto derivatives markets, especially on platforms like Binance, Bybit, and OKX. The fixed expiry forces traders to plan their strategies around the settlement date, influencing both risk management and position sizing.

How Do Quarterly Futures Contracts Work?

When you enter a quarterly futures contract, you're agreeing to settle the position on the contract's expiration date. Settlement can be either in cash (most common in crypto) or in the underlying asset. For example, if you hold a BTCUSD quarterly futures contract expiring in March, you must close or roll over your position before the settlement time—or let the exchange handle it automatically based on the final settlement price.

Key mechanics:

• Each contract represents a fixed amount of the underlying asset (e.g., 0.001 BTC per contract).
• Leverage is available, allowing traders to control large positions with less capital.
• Mark-to-market accounting happens daily to reflect unrealized gains or losses.

Traders must monitor the funding rate before expiry if they’re holding positions close to the rollover date—even though quarterly contracts don’t have continuous funding like perpetual swaps.

Step-by-Step: How to Trade a Quarterly Futures Contract

To trade a quarterly futures contract effectively, follow these steps precisely:

• Navigate to the futures section of your chosen exchange (e.g., Binance Futures).
• Select the quarterly contract from the dropdown menu—look for symbols like BTCUSDM24 for June 2024 expiry.
• Choose your position type: long (betting price will rise) or short (betting price will fall).
• Set your leverage using the slider or input field—common options range from 1x to 125x depending on risk tolerance.
• Input your order size in contracts or USD value.
• Confirm the order by clicking “Buy/Long” or “Sell/Short.”

Always double-check the contract expiry date displayed prominently in the interface. A common mistake is confusing quarterly with perpetual or bi-weekly contracts, which can lead to unintended exposure.

Differences Between Quarterly and Perpetual Futures

While both instruments allow leveraged trading, their structures differ significantly:

• Expiry: Quarterly contracts expire; perpetuals do not.
• Funding Fees: Perpetuals charge or pay funding every 8 hours to keep price aligned with spot; quarterly contracts do not have recurring funding.
• Settlement: Quarterly contracts settle once at expiry using a time-weighted average price (TWAP); perpetuals remain open until manually closed.
• Use Case: Traders use quarterly contracts for strategic positioning around events like halvings or earnings; perpetuals suit day traders or those wanting continuous exposure.

The absence of funding fees in quarterly contracts can be a cost advantage for longer-term holds, but it also means the contract may trade at a larger premium or discount to spot as expiry nears.

Risks and Considerations When Trading Quarterly Futures

Trading quarterly futures introduces specific risks beyond standard market volatility:

• Roll Risk: If you want to maintain exposure past expiry, you must manually or automatically roll to the next quarterly contract. This can result in slippage or unfavorable pricing.
• Leverage Risk: High leverage magnifies both gains and losses. A 5% adverse move with 20x leverage wipes out 100% of your margin.
• Liquidity Risk: Older quarterly contracts may have lower liquidity as expiry approaches, making it harder to exit at desired prices.
• Settlement Risk: If your position is not closed, the exchange will settle it automatically. Ensure your account has sufficient margin to avoid liquidation during this process.

Always use stop-loss orders and avoid holding positions with borrowed funds unless you fully understand the liquidation mechanics of your chosen platform.

Frequently Asked Questions

Q: Can I close a quarterly futures contract before it expires?Yes, you can close your position at any time before the settlement date by placing an offsetting trade—sell if you’re long, or buy if you’re short. Most traders exit before expiry to avoid settlement complications.

Q: What happens if I don’t close my quarterly futures contract by expiry?The exchange will automatically settle the position using the final settlement price, typically a TWAP of the underlying asset over the last hour. Any profit or loss will be reflected in your account balance.

Q: Are quarterly futures contracts available for all cryptocurrencies?No. Only major assets like BTC, ETH, SOL, and BNB typically have active quarterly futures markets. Lesser-known tokens may only offer perpetual or no futures at all.

Q: How do I know which quarterly contract I’m trading?Check the contract symbol—most exchanges use a format like ASSETYYMM. For example, ETHUSDH25 refers to an Ether quarterly contract expiring in March 2025 (H = March in some exchanges’ coding). Always verify the expiry date shown in the trading interface.