Cash and Carry arbitrage - 2-5% monthly

Cash and Carry arbitrage - 2-5% monthly

So you're probably thinking what kind of scam is it this time?
Well, this is the 'lucrative scam' of future arbitraging, It does require funds which will earn an 8%~ return for 3 months (at the time of writing).
Future markets of cryptos are out there and it's your time to shine.
First, let's start with basic mechanics... what is a future contract? (If your aware of the essence and functionality of futures, skip the following paragraph)

a futures contract (more colloquially, futures) is a standardized forward contract, a legal agreement to buy or sell something at a predetermined price at a specified time in the future. The asset transacted is usually a commodity or financial instrument, Bitcoin in our case. The predetermined price the parties agree to buy and sell the asset for is known as the forward price. The specified time in the future -- which is when delivery and payment occur -- is known as the delivery date.
Basically, if you sell a future you are obligated to pay the spot price for it on the delivery date. (spot price = asset price)
If you buy the future contract you will get the spot price on the delivery date, although you could sell it or buy contracts anytime.

Ok, after shortly covering futures. It's time to get your risk free coins.
First hop on to the crypto future market BitMEX.

After registering on the exchange - its time to get some money on a spot exchange (Kraken, Bitstamp, Bitfinex).
Let's say you are about to use 5500 USD for this endeavor.
What you would do is basically buy 5000 USD worth of bitcoin on the spot exchange and at the same amount sell 5000 USD WORTH of XBT18 Jun29 future contracts on Bitmex.
Because Bitmex allows leverage up to x100 you do not need to hedge yourself for the whole amount, I would recommend x10.
This way you would be investing 5500. 5000 for buying real bitcoins and 500 security for selling futures.
+5000 USD (buy bitcoin) and -5000 USD (sell bitcoin future) = 0 so you're position is ZERO meaning you don't care where the price goes.

VERY IMPORTANT - since you could get liquidated in case of a highly volatile market you must keep an eye (could use an email notifier) for the liquidation price on Bitmex and in case it gets close add funds to you're margin to hold the -5000 position intact, dont worry if the price goes against you on Bitmex your real bitcoins are worth more.

After buying the real bitcoins get them off the exchange and wait until you your contract expires.
We wait until Jun 29, - we send our original BTC to the spot exchange (keep forked coins) and sell the BTC exactly at the time Jun 29, 2:00 PM UTC which is the delivery time of futures on Bitmex - this way it doesn't matter if BTC went up or down in the time of our position because the short position is covered by our long position (Selling futures vs buying bitcoins).

So let's take a step back and see the big picture:
Bitmex offers us a future contract regarding the price of BTC, we could use this fact to buy bitcoins and sell futures of BTC without losing nor risking any money.
(might make extra premium as well at the time of writing).
This way we ensure ourself risk-free arbitrage profit.

Good Luck

Previous article NeverFiat Accepts Lightning Network Payments.
Next article Some beginner seller advice

Leave a comment

Comments must be approved before appearing

* Required fields