The Monero (XMR) derivative is in the form of a Futures Contract and allows traders to speculate on the future value of the Monero / Bitcoin (XMR/XBT) exchange rate. Traders need not have Monero to trade the futures contract as it only requires Bitcoin as margin.
The XMR futures’ underlying is the XMR/XBT exchange rate on Poloniex as recorded in the .XMRXBT Index. The futures are quoted in Bitcoin and all margin and PNL calculations are denominated in Bitcoin.
|XBT Contract Value||Multiplier * Futures Price * 1 XMR|
|USD Contract Value||XBT Contract Value * XBTUSD|
|PnL Calculation||# Contracts * Multipler * (Exit Price - Entry Price)|
Traders who think that the price of XMR will rise will buy the futures contract. Conversely, traders who believe the price will drop will sell the futures contract.
All margin is posted in Bitcoin, that means traders can go long or short this contract using only Bitcoin. The XMR 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 XMR futures contracts settle on the .XMRXBT30M Index Price. Settlement occurs every Friday at 12:00 UTC.
A trader wants to goes long 10 XBT of XMR futures contracts. XMR7D (the weekly XMR futures contract) trades at 0.0200 XBT. As the leverage is 20x, the trader only needs 0.5 XBT of margin for this trade.
The trader must buy 500 contracts: 10 XBT / (0.0200 XBT * 1).
A few days later, the price rises to 0.0250 XBT and the trader sells all their contracts.
The trader’s profit will be: 500 * 1 * (0.0250 - 0.0200) = 2.5 XBT