This article explains the structure and key features of Perpetual Futures Contracts.
🔍 What Is a Perpetual Futures Contract?
A Perpetual Futures Contract is a special type of futures contract that differs from traditional futures contracts.
📌 It does not have an expiration date
📌 Positions can be held indefinitely
📊 How Pricing Works
The price of a Perpetual Futures Contract is mainly based on:
📌 Index Price
(The average price calculated using price and volume data from major spot markets)
Because of this, perpetual futures prices usually trade:
👉 Close to the spot market price
⚠️ During Extreme Market Conditions
During periods of extreme market volatility,
the Mark Price may temporarily deviate from the spot market price.
⭐ Key Difference from Traditional Futures Contracts
The biggest difference is the concept of a settlement date (expiration date).
📌 Traditional Futures Contracts
→ Have a settlement/expiration date
📌 Perpetual Futures Contracts
→ Do not have an expiration date
🛡 Key Points Summary
✅ No expiration date → Positions can be held long-term
✅ Pricing is based on Index Price
✅ Usually trades close to spot market prices
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