FAQs for MOVE Contracts

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Disclaimers:

  1. MOVE contracts are over-the-counter (OTC) derivatives. FTX Australia Pty Ltd (FTX Australia) offers daily, weekly and quarterly MOVE Contracts which reference the price of bitcoin as the underlying asset.
  2. FTX Australia is licensed to issue, make a market and deal in derivatives. FTX Australia offers MOVE contracts to its clients and hedges 100% of client trades with FTX Trading Limited and/or its successors or assigns. 
  3. The following FAQs constitute general information only and do not constitute a recommendation or financial advice. We recommend that you obtain independent advice before trading MOVE contracts to ensure they are appropriate for your specific objectives, financial situation, needs and circumstances. 
  4. Before trading MOVE contracts, you should also read FTX Australia’s Terms of Service (Terms), Product Disclosure Statement (PDS), Financial Services Guide (FSG), Target Market Determination (TMD) and Privacy Policy located here. By trading MOVE contracts, you agree that you have read, understood and accept the Terms as well as the PDS, FSG, TMD and Privacy Policy.
  5. Details of our trading fees are set out in the PDS.
  6. This FAQ is current as at [10] September 2022. It may become out of date at some point and/or fail to reflect updated policies.
  7. FTX Australia reserves the right to restrict MOVE contract trading as it sees fit.
  8. FTX Australia only services clients of FTX Australia. Further information on location restrictions can be found here.

 

What are MOVE contracts?

MOVE contracts represent the absolute value of the amount a product (for example, bitcoin or BTC) moves in a specified period of time, which is fixed by reference to Coordinated Universal Time (UTC). Investors purchase either a long MOVE contract or a short MOVE contract. 

A long MOVE contract means you will profit if bitcoin moves a lot over the specified contract period (i.e. a day, week or 3 months). A short MOVE contract means you will profit if bitcoin is relatively stable over a contract period of time. It does not matter in which direction the price of bitcoin moves.  

For example, where the price of bitcoin is $20,000 at the start of a daily MOVE contract (that is a contract that is opened for 24 hours), and then moves to $25,000 by the end of the daily MOVE contract, the daily move of the bitcoin price is $5,000. The daily move of the bitcoin price will also be $5,000 if the bitcoin price drops to $15,000. If the price of bitcoin moves to $19,900, then there has only been a $100 move. Question 5 below explains how we calculate the move of the bitcoin price over the contract period of a MOVE contract. 

MOVE contracts are like futures, except instead of expiring to the price of an underlying instrument or token, they expire to the amount its price moved. By trading MOVE contracts, you speculate on whether the bitcoin price will be volatile or relatively stable. It does not matter if the bitcoin price goes up or down over the contract period. MOVE contracts can be used to hedge volatility in the bitcoin price. Like futures, you can get leveraged long or short MOVE contracts using collateral.

 

What type of MOVE contracts are there?

FTX offers Daily, Weekly and Quarterly MOVE contracts. 

The Daily MOVE contract expires to the absolute value of the difference of bitcoin’s price from the start of the day until the end of the day measured in UTC. For example, for a BTC-MOVE 2022-08-17 contract, if bitcoin’s price goes from $23,000 at the start of 17 August 2022 (00:00:00 UTC), but drops to $21,000 at the end of 17 August 2022 (00:00:00 UTC), the daily move of bitcoin’s price is $2,000. Therefore, the Daily MOVE contact expires to $2,000 which will always be a positive number regardless of which direction it moves in. 

The Weekly MOVE contract expires to the absolute value of the difference between bitcoin’s price at the start of 7 days and bitcoin’s price at the end of the 7 days, whereas the Quarterly MOVE contract expires to the move of the bitcoin price over a 3 month period. All time periods are measured in UTC.

 

How do MOVE contracts work?

Take, for example, a BTC-MOVE 2022-08-30 contract. This contract trades during the previous day (2022-08-29) as a futures market. At the end of 2022-08-30 it expires to the absolute value of the bitcoin move from the start of 2022-08-30 until the end of 2022-08-30 measured in UTC. So if bitcoin goes from $19,400 to $19,650 during the contract period, the BTC-MOVE 2022-08-30 contract expires to $250. If bitcoin goes from $19,400 to $19,300 the 2022-08-30 MOVE contract expires to $100. This means that the MOVE contract expires to a positive number whether bitcoin goes up or down; its price is determined by how much BTC moves, not which direction it moves in. You can trade MOVE contracts with or without leverage. MOVE contracts can be traded by posting collateral in stablecoins and digital assets to cover initial and maintenance margins. They are settled in stablecoins.

 

What do MOVE contracts expire to?

MOVE contracts are similar to futures; except instead of expiring to the price of a token, they expire to the absolute value of the difference between the TWAP price (time-weighted average price) of bitcoin over the first hour and the TWAP price of bitcoin over the last hour of the specified contract period, measured in UTC. In other words, if the TWAP of bitcoin during the first hour of the MOVE contract is $20,000, and the TWAP of bitcoin during the last hour of the MOVE contract is $25,000, then bitcoin has moved $5,000. 

So, for example, BTC-MOVE 2022-08-30 expires to [(BTC Index TWAP from 2022-08-30 23:00:00-23:59:59 UTC) - (BTC Index TWAP from 2022-08-30 00:00:00-00:59:59 UTC)].

BTC-MOVE-WK 2022-08-30 expires to ABS[(BTC Index TWAP from 2022-08-30 23:00:00-23:59:59 UTC) - (BTC Index TWAP from 2022-08-24 00:00:00-00:59:59 UTC)].

BTC-MOVE-2022 Q2 expires to (BTC Index TWAP from 2022-06-26 02:00:00-02:59:59 UTC) - (BTC Index TWAP from 2022-03-27 03:00:00-03:59:59 UTC)].]. 

Please note that the Quarterly MOVE contract always expires on the last Friday of each quarter so the contract period is approximately three months.

There are two Daily MOVE contracts every day: (i) one new MOVE contract to trade the next day's move; and (ii) one MOVE contract to trade the current day's move. There will also be a MOVE contract to trade the current week and the three weeks after it. Similarly, there will be a new quarterly MOVE contract each quarter and the three quarters after it will also trade. 

The BTC price is calculated by reference to the FTX BTC spot index.

You can find a history of expirations here, or via the API.

 

How do MOVE contracts relate to options and volatility?

MOVE contracts are straddles with a strike price equal to the TWAP of the first hour of their specified contract period and underlying expiration price equal to the TWAP of the last hour of their contract period.

The more volatile the bitcoin price is the higher its expected move. If you assume that the bitcoin price follows a Gaussian distribution, the expected absolute value of its daily move should be sqrt(2/pi) times the product’s daily volatility (or weekly volatility for weekly MOVE contracts). Based on this assumption, a daily MOVE contracts’ value would be roughly 80% of bitcoin’s daily volatility.

 

How does FTX show the Profit and Loss (PnL) on MOVE contracts?

Until a MOVE contract expires, its PnL will be marked to market--meaning that your PnL will be (number of MOVE contracts bought) * (mark price - purchase price).

Once a MOVE contract expires--which will happen at the end of the specified contract period measured in UTC--it will be replaced in your account with a USD equivalent amount equal to its expiration price.

 

How does margin work for MOVE contracts?

The amount of margin you must post to open a MOVE contract position depends on whether you plan to go long or short BTC-MOVE contracts. A short BTC-MOVE contract requires as much collateral as a bitcoin perpetual futures contract (BTC-PERP).  For instance, if you select 2x leverage and want to sell one Daily MOVE contract when BTC-MOVE is trading at $150 and bitcoin is trading at $20,000, you will need post $10,000 in initial margin as collateral. In this scenario, the margin treatment of a MOVE contract depends on the FTX BTC spot indexprice and not the price of the MOVE contract itself. 

By way of further example: let's say that the BTC index price starts a day at $20,000 and doesn't move for 20 hours. At this point the BTC-MOVE contract expiring at the end of that day is probably trading at close to 0. If the bitcoin price then increases 3% in the last 4 hours before the contract expires, BTC-MOVE will expire to $600. So the MOVE contract's price changed by about $550 in the last few hours--similar to the $600 that bitcoin's price changed. The risk of shorting a single BTC-MOVE contract is similar to the risk of holding a single bitcoin or BTC-PERP position, so they require the same amount of collateral.

The price of the FTX BTC spot index price is listed on the market page for the MOVE contract.

If you hold a long MOVE contract, the amount of margin you have to post is capped at the mark price of the MOVE contract. This means that the margin you post in order to go long MOVE contracts is —either the margin you’d need to post based on the FTX BTC spot index price, or the mark price of the MOVE contract if you're long – whichever is smaller.

Examples

Say that you have $10,000 in your account, MOVE is trading at $250, you select 2x maximum leverage, and BTC is trading at $20,000.

In order to go short MOVE contracts:

Your maximum leverage is 2x, so your initial margin has to be 50%. 50% of $20,000 is $10,000, so you have to post $10,000 of collateral per MOVE contract; that means that you can get short at most $10,000 / $10,000 = 1 MOVE contracts.

In order to get long MOVE:

As above, the bitcoin price would imply you would have to post $10,000 of collateral per MOVE. However, if you're getting long you never need more collateral than the price of the MOVE contract--in this case $250. So in fact you can get long up to $10,000 / $250 = 40 MOVE contracts.

Formula

In general, if you’re getting short MOVE, your maximum position size is:

Free collateral * Max allowed leverage / BTC price

If you’re getting long MOVE your maximum position size is:

Free collateral * MAX(Max allowed leverage / BTC price, 1 / MOVE price)

 

How do liquidations work for MOVE contracts?

Liquidations for MOVE contracts work the same as liquidations for other contracts, given the margin requirements. If your total collateral drops below your required maintenance margin, your open positions will begin to be liquidated.

 

Where can I find information about expired MOVE contracts?

You can see the expiration price of previous futures and MOVE contracts here. You can also query historical data from our API.

 

What are the fees for trading MOVE Contracts?

Details of our trading fees are set out in the PDS.. 

By way of example, if your fee rate is 0.20% and you buy one BTC-MOVE contract when BTC-MOVE is trading at $250 and BTC is trading at $20,000, then our fee will be 0.20% * $20,000 = $40. 

 

Where can I find further information about MOVE contracts?

You can find a video explanation of MOVE contracts here.

 

MOVE contracts are complex products, suitable for experienced investors only. They provide exposure to the volatility of the bitcoin price. The price of cryptocurrencies such as bitcoin are more volatile than the price of assets like shares. These risks, coupled with the use of leverage, means that an investment can result in significant gains or losses. If movements in the market for these products or bitcoin decrease the value of your position, you may be required to have or make additional Collateral. If your Collateral falls under the minimum margin requirements we set, your position may be liquidated at a loss, and you will remain liable for any deficit in that Collateral.

 

Clients of FTX Australia should read the PDS, the Terms, TMD, FSG and Privacy Policy in their entirety before making any decision to trade MOVE contracts. Copies are available here.

 

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