What Is a “Price Dislocation” and How Does It Affect Margin Calls?
The weights of constituent exchanges in an Index Price calculation typically vary based on their trading volume and market quality. Exchanges with higher, consistent trading volume and robust market integrity often receive a higher weighting, as their prices are considered more representative of the true market value.
Some methodologies may also adjust weights to penalize exchanges exhibiting poor performance or low liquidity.
Glossar
Index Price Calculation
Derivation ⎊ Index Price Calculation within cryptocurrency derivatives represents a methodology for establishing a fair value for an underlying asset, typically a cryptocurrency, used as a reference for perpetual contracts and other linear derivatives.
Index Price
Derivation ⎊ Index price construction for crypto derivatives requires selecting a representative basket of underlying assets and calculating a weighted average based on established market capitalization or volume metrics.
Crypto Derivatives
Synthetic Instruments ⎊ Crypto Derivatives are complex financial contracts whose value is derived from an underlying crypto asset, index, or rate, encompassing futures, options, swaps, and perpetual contracts traded on digital asset exchanges.