Delta Exchange, a crypto asset derivatives exchange, reports that it has maintained a stable monthly trading volume of $400-$500 million.
Delta Exchange’s management revealed on March 3, 2020, that they’re introducing their options products, including BTC-MOVE and ETH-MOVE contracts.
Delta Exchange is reportedly the first crypto exchange to introduce MOVE products on Ethereum, and will also offer MOVE contracts on other major cryptocurrencies, including XRP, Bitcoin Cash (BCH), Litecoin (LTC) and Binance Coin (BNB) in the coming months.
We caught up with Pankaj Balani, CEO at Delta Exchange, who explained what MOVE contracts are, and why they might be an important or useful addition to the cryptocurrency trading ecosystem.
Crowdfund Insider: What are MOVE contracts and why are they a significant addition to the derivatives ecosystem?
Pankaj Balani: “MOVE contracts are representations of how much an asset will move over a period of time and what those movements will render monetarily. The most important aspect o a MOVE contract is, the length of time on which the ‘MOVE’ is measured. The contract can be daily or weekly or monthly etc. Daily maturity looks to predict daily movement, similarly for weekly and monthly. MOVE contracts are often criticized as ‘betting’ on the volatility of the cryptocurrency market, but the contracts actually involve in-depth strategies and expansive knowledge of the market.
Like futures, MOVE contracts will add value to the derivatives ecosystem because they provide a way for price discovery of the predicted volatility of cryptocurrencies. MOVE contracts are another risk management technique for the derivatives community to employ. They also render profit and value from the volatility of the cryptocurrency market – a characteristic of the industry that traditional financial institutions often criticize. In other words, MOVE contracts are further cementing the legitimacy and importance of the cryptocurrency industry as a whole.”
Crowdfund Insider: What type of MOVE contracts currently exist and how are they performing?
Pankaj Balani: “There are three main types of MOVE contracts – daily, weekly, and quarterly. Daily MOVE contracts predict the movement of an asset over the course of a day. Weekly MOVE contracts predict the movement over a week and quarterly MOVE contracts over a quarter.
New MOVE contracts are available as a current one ends, giving users time to make an informed decision and to allow traders to begin trading ahead of the date. For example, if a trader knows about important news or an event that will affect the market, the trader can begin trading for that daily, weekly, or quarterly contract. Currently, daily and weekly MOVE contracts are more popular than longer contracts like a quarterly MOVE contract.”
Crowdfund Insider: How do MOVE contracts work and do Move contracts expire?
Pankaj Balani: “MOVE contracts allow traders to trade the volatility of the cryptocurrency market based on how much specific assets will move during a determined amount of time. While futures expire at a specific price an asset will get to, MOVE contracts expire at the amount of change from their original price on the market – whether the change was good or bad. If an asset’s price is worth $8200 at the start of the day, and by the end of the day it is worth $8000, the MOVE contract’s price is worth $200. Even though the price went down, the MOVE contract’s worth is found in the amount of change, not whether that change was good or bad.
A trader can be long or short MOVE contract. A trader who is long MOVE contract expects that the asset will have a lot of movement over a pre-determined amount of time, while a trader who is short MOVE contract expects the asset to remain stable. MOVE contracts are similar to futures and can be thought of as a future on the movement in asset price. Just as futures, collateral for MOVE contracts is also a certain percentage of the asset itself.”
Crowdfund Insider: Who does MOVE contracts appeal to and why?
Pankaj Balani: “MOVE contracts appeal to traders of futures contracts because they share so many features. Sellers of futures contracts may also be interested in selling MOVE contracts because they have an opportunity to derive profit from time value as well as the return of absolute volatility.”
Crowdfund Insider: How can investors benefit from using MOVE contracts?
Pankaj Balani: “Investors can benefit from using MOVE contracts because instead of relying on a stable, inclining market, MOVE contracts can yield valuable income in both stable and volatile conditions. In fact, volatility can be beneficial, because MOVE contracts expire at the amount of change the asset underwent between its starting and ending prices. MOVE contracts can be even more beneficial for investors in markets as the current ones – where current events like Brexit and the coronavirus are making the traditional finance markets drop and the crypto market rise.”