FTX's MOVE CONTRACT Explained
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The MOVE CONTRACT and the HASH RATE PRODUCTS are wonderful features FTX has initiated which is giving the Exchange an edge over other exchanges. However, in this article, we will be talking about the MOVE CONTRACT
With FTX BTC-MOVE contracts, you don't have to a pro trader before you can take advantage of this market. You can either long or short the BTC-MOVE contract. They are pretty similar to trading futures, but instead of expiring at the BTC price, they expire to the amount the price moved or dollar value moved.
You don’t have to be bullish or bearish. You can be market neutral. It’s about volatility. Stressing yourself on what direction the price will go will be of no use. You could long a BTC-MOVE contract and don’t have to worry about it either breaking up or down. You only need a move in either direction.
Example 1: If a daily BTC moves $500 from the beginning to the end of a day, the BTC-MOVE contract will expire to $500, whether BTC went up or down. The dollar amount moved in BTC equals the dollar value of the BTC-MOVE contract.
Example 2: Let's consider a BTC-MOVE 2018-08-30 contract. This contract trades during the previous day (2018-08-29) as a futures market. At the end of 2018-08-30 it expires to the absolute value of the BTC move from the start of 2018-08-30 until the end of 2018-08-30. So if BTC goes from 9100 to 9600 during 2018-08-30 MOVE expires to $500; if BTC goes from 9100 to 9200 MOVE expires to $100.
You can decide to go Long if you perceive that BTC will have a huge move in the dollar value at the end of the MOVE CONTRACT; you can decide to go short if perceive that the MOVE will be little or there will be a slight change in the dollar value at the end of the Contract
ON FTX, there are 3 types of MOVE Contracts
There are daily, weekly, monthly, and quarterly MOVE contracts.
Daily MOVE contract is a future that expires to several dollars that BTC moves in one day represented in the UTC timezone e.g., MOVE-0528 is the MOVE contract expiring at the end of May (5th month) 27th UTC.
Weekly MOVE contracts expire to the move over seven days. e.g., MOVE-WK0529- expires to the amount that underlying asset moves between the start of May twenty-second and the end of May twenty-ninth
Quarterly MOVE contracts expire to the movement over a roughly three month. e.g., MOVE-2020Q2 expires to the amount that the underlying asset moves during Q2 2020, from March twenty-seventh, 2020 to June twenty-fifth, 2020.
*If you're buying(long) it means you're expecting high volatility in the market price, if you're selling(short) it means you are expecting low volatility in market price.
*Getting long MOVE contracts means you will win if BTC moves a lot the next day in either direction. * *Getting short MOVE contracts means you will win if BTC is relatively stable.
More on BTC-MOVE CONTRACTS
Youtube Explainer Video: https://youtu.be/IRU52DtWnFk
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