MOVE contracts on FTX: what they are and how to profit

What are MOVE contracts?

MOVE are futures contracts on the FTX exchange. A MOVE’s price reflects the absolute change in the underlying asset’s price from the moment the contract is launched.

MOVE contract specifications include:

• underlying asset — the asset whose price determines the contract price, in this case bitcoin;
• expiry time — the date and time when the exchange will close the contract and all positions in it;
• strike — the price at which the exchange fixes the contract.

FTX sets the strike for MOVE contracts at 00:00 (UTC) or 03:00 Moscow time.

How do MOVE contracts on FTX work?

The contract’s value rises as the spread widens between the current price of the bitcoin perpetual future (BTC-Perp) and its price at the time the MOVE started and the strike was fixed. When that spread narrows, the MOVE price falls.

Example: When a daily contract launched, the bitcoin perpetual was priced at $55,000. The MOVE price will:

• increase by $1,000 if bitcoin reaches $56,000;
• increase by $1,000 if bitcoin falls to $54,000;
• drop to $0 if bitcoin trades at $55,000.

Second example: On May 19, bitcoin fell from $43,000 to $30,000. Over the same period, the weekly MOVE rose from $7,000 to $18,000:

Why do MOVE contracts rally when bitcoin falls?

MOVE replicate the options straddle strategy. When buying a contract, a trader effectively gets both a put and a call option with the same strike. The upside from owning the put and call is theoretically unlimited, while the maximum loss equals the options’ cost at purchase.

If bitcoin’s price moves, profit on one option offsets the loss on the other. The trader’s profit depends on the absolute difference between the strike and bitcoin’s price at expiry.

If at expiry bitcoin trades at the strike, the trader incurs losses.

Thanks to the limited maximum loss and the combination of options, a MOVE contract’s price can rise even during bitcoin sell-offs.

Example: Bitcoin trades at $56,000. You buy a daily MOVE with a $56,000 strike. The MOVE price will:

• rise by $4,000 if bitcoin falls to $52,000;
• rise by $4,000 if bitcoin reaches $60,000;
• fall to $0 if bitcoin remains at $56,000.

What types of MOVE contracts are on FTX?

FTX lists daily, weekly and quarterly bitcoin MOVE contracts.

The tickers show the type and expiry date:

• BTC-MOVE-MMDD — a daily contract where MM is the month and DD the day. BTC-MOVE-0512 expires on May 12;
• BTC-MOVE-WK-MMDD — a weekly contract where MM is the month and DD the day. BTC-MOVE-WK-0521 expires on May 21;
• BTC-MOVE-YYYYQQ — a quarterly contract where YYYY is the year and QQ the quarter. BTC-MOVE-2021Q4 expires at the end of Q4 2021.

How are MOVE contracts traded?

The opening price of the next MOVE depends on the current contract’s volatility. The higher the underlying’s volatility, the more expensive the contract at the open.

MOVE contracts trade in two phases:

1. A linear future on bitcoin’s implied volatility. This phase ends when the strike is fixed.
2. A future on the absolute price range. This phase ends at contract expiry.

Example with the daily BTC-MOVE-0526:

1. From May 25 to May 26 the contract trades as a linear future.
2. From May 26 to 00:00 (UTC) on May 27 the contract trades like a straddle.

What are the trading terms for MOVE?

A BTC-MOVE contract equals the price of one bitcoin. The minimum position size is 0.01% of the current MOVE price.

You can use market, limit and stop orders with leverage up to 100x. Margin works the same way as for the BTC-PERP perpetual future.

MOVE trading fees range from 0.07% to 0.04% depending on the user’s monthly volume. Holding and staking FTT reduces the taker fee to 0.015%.

How to profit from MOVE contracts?

When bitcoin moves away from the strike, the MOVE price rises. When bitcoin returns to the strike, the MOVE price falls.

Example of profit from buying: a daily MOVE costs $2,500. The strike is $55,000 and bitcoin trades at $55,000. You buy one MOVE. By expiry, bitcoin falls to $54,000 and the MOVE price rises to $3,600. Your profit is $1,000.

Example of profit from selling: a daily MOVE costs $2,000. The strike is $54,000 and bitcoin trades at $54,000. Bitcoin rises to $55,000 and the MOVE price to $3,000. You sell one MOVE. Later bitcoin falls to $54,500 and the MOVE price declines to $2,500. Your profit is $500.

What are the risks when trading MOVE?

When buying MOVE, the maximum loss is limited to the contract’s cost. In the worst case the trader loses the amount paid for MOVE. FTX does not liquidate a long position if the trader’s collateral exceeds the cost of the purchased contracts.

When selling MOVE, the maximum loss is unlimited. FTX may liquidate a short position if margin is insufficient.