On BitMEX, the XLM derivative is in the form of a Contract and allows traders to speculate on the future value of the Stellar / Bitcoin (XLM/XBT) exchange rate. Traders need not have Stellar to trade the contract as it only requires Bitcoin as margin.
The XLM contracts’ underlying is the XLM/XBT exchange rate on Poloniex as recorded in the .XLMXBT Index. The contracts are quoted in Bitcoin and all margin and PNL calculations are denominated in Bitcoin.
|XBT Contract Value||Multiplier * Contract Price * 1 XLM|
|USD Contract Value||XBT Contract Value * XBTUSD|
|PnL Calculation||# Contracts * Multiplier * (Exit Price - Entry Price)|
Traders who think that the price of XLM will rise will buy the contract. Conversely, traders who believe the price will drop will sell the contract.
All margin is posted in Bitcoin, that means traders can go long or short this contract using only Bitcoin. The XLM 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 XLM contracts settle on the .XLMXBT30M Index Price.
A trader wants to goes long 10 XBT of XLM contracts. XLMF18 (the monthly XLM contract) trades at 0.00002 XBT. As the leverage is 20x, the trader only needs 0.5 XBT of margin for this trade.
The trader must buy 500,000 contracts: 10 XBT / (0.00002 XBT * 1).
A few days later, the price rises to 0.000025 XBT and the trader sells all their contracts.
The trader’s profit will be: 500,000 * 1 * (0.000025 - 0.00002) = 2.5 XBT