On BitMEX, the ADA derivative is in the form of a Futures Contract and allows traders to speculate on the future value of the Cardano / Bitcoin (ADA/XBT) exchange rate. Traders need not have Cardano to trade the futures contract as it only requires Bitcoin as margin.
ADA futures’ underlying is the ADA/XBT exchange rate on Bittrex as recorded in the .ADAXBT Index. The futures are quoted in Bitcoin and all margin and PNL calculations are denominated in Bitcoin.
|XBT Contract Value||Multiplier * Futures Price * 1 ADA|
|USD Contract Value||XBT Contract Value * XBTUSD|
|PnL Calculation||# Contracts * Multiplier * (Exit Price - Entry Price)|
All margin is posted in Bitcoin, that means traders can go long or short this contract using only Bitcoin. The ADA futures contracts feature a leverage of up to 20x.
For example, to buy 10 Bitcoin worth of contracts, you will only require 0.5 Bitcoin of Initial Margin.
The ADA futures contracts settle on the .ADAXBT30M Index Price.
A trader wants to goes long 10 XBT of ADA futures contracts. ADAJ18 (the monthly ADA futures contract) trades at 0.10 XBT. As the leverage is 20x, the trader only needs 0.5 XBT of margin for this trade.
The trader must buy 100 contracts: 10 XBT / (0.10 XBT * 1).
A few days later, the price rises to 0.15 XBT and the trader sells all their contracts.
The trader’s profit will be: 100 * 1 * (0.15 - 0.10) = 5 XBT