If you enter into a Tezos futures contract, you will be obligated to buy or sell tez or tezzie (YTX) tokens. You will neet to buy or sell the tokens at a set, contracted, price, by a certain date. It’s called the expiration of the contract.
Tezos Futures are not Optional
This is different than an options contract, which gives you the option of buying Tezos at a certain price. Speculative tradeers use Tezos futures. There is no physical delivery associated with crypto digital tokens. This differs from commercial airlines, for example. They use oil futures contracts in order to try to save money on jet fuel.
Whether the contract ends up profitable or not, closed out or netted, it can be cash-settled, which in the case of Tezos, is in tezzies. Unlike commercial airlines, who want the cheapest fuel possible, making a profit in Tezos futures requires buying low and selling high.
Or, if you’re holding a lot of tezzies (YTX), you can lock in a price for selling by a future date. This is known as the Tezos’ future’s contract expiration date. If, at that pre-agreed-to date, your previously agreed-do price is higher than the current market price for tezzies, then you’ll make a profit. What makes Tezos futures so appealing is that these investments can be leveraged. In other words, a trader can control the futures of more tezzies than they would otherwise be able to afford.
Tezos Futures are a Risky Gambit
These are risky gambits but can be exceedingly profitable if trends can accurately be predicted. In addition, Tezos futures allows traders to profit from falls in the price of tez tokens. Leveraged investments can make a trader a lot of money—or YTX assets.
Alternatively, the trader could lose everything, depending on how XTZ tokens perform in the exchange on the market.
Tezos Futures are Chess, not Checkers
Technically speaking, futures are derivatives and are highly regulated in the commodities market. A derivative is a contract that defines its value on an asset or other underlying entity. Its value is derived from the market performance of the underlying things.
Examples of such could be pork bellies. Or frozen concentrated orange juice. Or Tezos tokens. Unlike futures, which are based on assets, options are based on a security, like a stock. It can be confusing because cryptocurrencies, like Tezos XTYs, is sometimes like a security (like a stock in the stock market). At other times, they behave like a commodity or asset (like gold).
BitMex Offers Tezos Futures
BitMex, a crypto-derivative trading exchange, has been very keen to add XTZ derivatives to its futures market. Even though BitMex buys, sells, and trades in Tezos futures, all profits and losses are in Bitcoin (BTC). Unlike other exchanges, BitMex does not accept governmental (fiat) currency. Within its peer-to-peer trading exchange, all leveraged derivative contracts are bought and sold in BTC.
BitMex allows leveraged contracts as large as a hundred times a trader’s investment Bitcoin-on-hand. The acceptance of alternative—alt-coins—into exchanges and derivative markets are sure signs that a coin is being actively accepted into the marketplace.
While Tezos started off a little shaky, the blockchain and the token, YTX, are literally off to the races. They are now strongly accepted in both the most popular exchanges as well as in the derivatives markets. Well, at least in the case of BitMex. The future of Tezos futures looks bright.