Calculate the ROI of a "Delta-Neutral" strategy. Earn consistent funding fees by going long on spot and short on futures without market direction risk.
When funding is positive, Longs pay Shorts. By holding spot (Long) and an equal sized Futures (Short), you hedge all price moves while collecting the "rent" (funding) from the market.
To cover trading fees
Risk Warning: This strategy is market-neutral on price, but not on Funding. If the funding rate turns negative, you will be paying the fee instead of collecting it. Always monitor the funding trend.
In trading, Delta refers to your price exposure. A Delta-Neutral strategy means your position value does not change when the asset price moves up or down. By holding a Spot Long and a Futures Short of equal size, you are hedged 100%. Your profit comes solely from the funding payments.
Perpetual futures don't have an expiry date. To keep the futures price close to the actual spot price, exchanges use a Funding Rate. If more people are buying (Bulls), they pay a fee to the sellers (Bears). If more are selling, Bears pay Bulls.
Pro Tip:
Look for assets with high "Social Hype"—these usually have the highest funding rates as retail traders FOMO into longs.
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