How Do the Settlement Mechanics Differ for a Perpetual Swap versus an Option? ⎊ Path

How Do the Settlement Mechanics Differ for a Perpetual Swap versus an Option?

A perpetual swap has no expiration date and settles continuously via a "funding rate" mechanism, where the net difference between the contract price and the index price is exchanged between counterparties, often every eight hours. An option settles only upon expiration or exercise, requiring a single, final transfer of the underlying asset (physical) or cash difference (cash).

How Does MTM Differ from the Settlement Process for a Forward Contract?

How Does the Daily Settlement Process Differ between Futures and Forwards?

How Often Is the Funding Rate Typically Calculated and Exchanged on Major Crypto Exchanges?

Can a Trader Prevent Liquidation Once the Process Has Started?

Define and Compare Gross Settlement versus Net Settlement in the Context of Derivatives

Does Using a TWAP for Settlement Introduce Basis Risk for Hedgers?

What Is the Concept of “Data Immutability” Once an Oracle Submits Data to the Chain?

How Does the Lack of Early Exercise Simplify the Accounting Treatment for Derivatives?

Glossar

Perpetual Swap

Mechanism ⎊ Perpetual swaps, within cryptocurrency markets, represent agreements to exchange cash flows based on the difference between a cryptocurrency’s current price and a user-defined price, perpetually, without an expiration date.