Spot vs Futures Strategy
🔹Spot Market
* Assets are bought/sold for immediate delivery.
* Price is current market rate.
* No leverage (usually).
* Used for direct ownership (e.g., stocks, crypto, commodities).
🔹Futures Market
* Contract to buy/sell asset at a future date at a fixed price.
* Settles on expiry or via cash settlement.
* Often traded with leverage.
* Used for speculation or hedging.
🔹Spot vs Futures Strategies
1. Cash-and-Carry Arbitrage
* Buy in spot market.
* Sell futures (when futures > spot — contango).
* Hold until expiry for risk-free profit.
2. Reverse Arbitrage
* Short spot asset.
* Buy futures (when futures < spot — backwardation).
* Profit on convergence.
3. Hedging
* Hold asset in spot.
* Take opposite position in futures to reduce risk.
4. Basis Trading
* Trade the difference (basis) between spot and futures.
* Profit from basis movement.
✔ Benefits: Arbitrage, leverage, risk reduction
⚠ Risks: Price mismatch, margin calls, funding costs, illiquidity
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