Does the Fee Structure Affect the Bankruptcy Price Calculation?
Yes, the fee structure affects the bankruptcy price calculation. Trading fees (taker/maker) and any incurred funding fees are deducted from the trader's margin, which slightly moves the bankruptcy price closer to the entry price.
The cumulative effect of fees reduces the effective buffer against liquidation.
Glossar
Bankruptcy Price
Threshold ⎊ This theoretical price point represents the level at which a specific derivative position, often collateralized, becomes sufficiently under-margined to trigger immediate liquidation or default procedures under the governing contract terms.
Liquidation Fee
Mechanism ⎊ A liquidation fee, within cryptocurrency derivatives and options trading, represents a cost incurred when a leveraged position is forcibly closed by an exchange due to insufficient margin maintenance.
Funding Fees
Mechanism ⎊ Funding fees represent periodic payments exchanged between parties holding opposing positions within perpetual futures contracts, functioning as a cost or revenue dependent on the difference between the perpetual contract price and the spot price of the underlying asset.
Trading Fees
Cost ⎊ Trading fees represent a quantifiable deduction from capital employed in executing strategies across cryptocurrency, options, and derivative markets, directly impacting net profitability and risk-adjusted returns.
Fee Structure
Allocation ⎊ Fee structures within cryptocurrency, options trading, and financial derivatives represent the systematic distribution of costs associated with executing and maintaining positions, impacting net profitability and strategic decision-making.
Bankruptcy
Default ⎊ This state signifies a critical failure where a counterparty's obligations exceed their available collateral, often triggered in options or futures trading when losses cannot be covered.