Introduction to Inverse Perpetual Contract

    bybit2023-12-04 11:40:04

    Bybit offers Inverse Perpetual Contracts that allow traders to use BTC and other coins as the base currency. The trader needs to set the transaction quantity with the value of the U.S. dollar (quoted currency), and then the margin, profit and loss are calculated using the base currency (such as BTC, ETH). Therefore, if you want to trade a BTCUSD or ETHUSD contract, you must hold BTC or ETH accordingly in your Derivatives Account.


    Tip: You can use the Asset Exchange function to instantly exchange assets according to your trading needs. For more information, please refer to How to Convert Your Assets .

     

    Inverse Perpetual Contract Specifications

     

    Symbol 

    BTCUSD, ETHUSD, BITUSD and more.

    Expiration

    There is no expiration date for Inverse Perpetual Contracts

    Type

    Settled in base currency such as BTC, ETH and BIT;
    Contract quantity quoted in USD 

    Minimum Order Size

    1 USD per Contract

    Fees

    Funding Fees; Trading Fees

    Position Mode

    One-way mode

    Order Placement

    Order by Quantity 

     

    For more contract details about the Bybit Inverse Perpetual Contract, please visit here.



    Example

    Assuming that Trader A buys 10,000 contracts when the BTC price is $23,000, the equivalent BTC for $10,000, which is 10,000/23,000 ≈ 0.435 BTC.

     

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    When the price of BTC rises, let’s say that Trader A closes all positions at $25,000. This means that Trader A buys back the $10,000 contract and sells the same value of BTC, which is 10,000/25,000 = 0.4 BTC

    In this case, Trader A has a total profit of 0.435 − 0.4 = 0.035 BTC (excluding trading fees and funding fees).

    To learn more about how to calculate Profit and Loss (P&L) for Inverse Perpetual Contracts, please refer here.

     
     

    The difference between Inverse Perpetual Contract and USDT Perpetual Contract

    An Inverse Perpetual Contract is different from a USDT Perpetual Contract in the calculation of margin, Profit and Loss (P&L) and risk exposure.

     
     

    Margin and P&L Calculation

    Margin and P&L calculations for Inverse Perpetual Contracts use BTC or other coins as collateral, producing a payoff in BTC or other corresponding coins. The calculations for Linear Perpetual Contracts are more straightforward than for Inverse Perpetual Contracts. The linear Perpetual Contract uses USDT as quoted currency and also collateral, producing a payoff in USDT. 

     


    Read More
     

    P&L Calculations (USDT Contract)

    P&L Calculations (Inverse Contract)

     

     

    Risk Exposure

    Inverse Perpetual Contracts are traded and settled with the underlying asset. Traders are naturally exposed to the market risk of the collateral itself, even if they don’t hold any positions.

    On the other hand, USDT Perpetual Contracts are settled in USDT. You don’t have to worry about the market risk of collaterals such as BTC. However, stablecoins may not be 100% stable and USDT is not entirely risk-free. Please manage your own trading risks https://www.bybit.com/trade/inverse/BTCUSD.
     

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