How to arbitrage the Ouyi OKEX perpetual contract

The okex perpetual contract arbitrage strategy is a risk-free arbitrage transaction that takes advantage of price differences between different markets or expiration dates. Triangular arbitrage involves trading between three markets, while cross-market arbitrage involves trading between contracts with different maturities on the same market. Risks include market volatility, transaction fees, illiquidity and leverage amplifying potential losses.

The arbitrage strategy of okex perpetual contract

What is perpetual contract arbitrage?

OKEX perpetual contract arbitrage is a strategy that uses the difference in market prices of perpetual contracts for risk-free arbitrage trading. Perpetual contracts are financial derivatives based on the price of an underlying asset that allow traders to use leverage to go long or short an asset.

Arbitrage Strategies

There are two main OEX perpetual contract arbitrage strategies:

• Triangular Arbitrage: Involves trading between three different perpetual contract markets to take advantage of price differences.
• Cross-market arbitrage: Involves trading between different contract expirations on the same perpetual contract market to take advantage of price differences.

Triangular Arbitrage

For example, let’s say the BTC perpetual contract is priced at $50,000 on OKEX, $50,100 on Binance, and $49,900 on Huobi Global . Triangular arbitrage traders can:

• Go long 1 BTC ($50,000) on OEX )
• This will generate a risk-free profit of $100 (50,100 - 49,900).

Cross-market arbitrage

For example, assume that the quarterly contract price of the BTC perpetual contract on okex is $50,000, and the perpetual contract price is $50,100. A cross-market arbitrage trader can:

Short 1 BTC ($50,000) on the quarterly contract

Long 1 BTC ($50,100) on the perpetual contract

• This will generate a risk-free profit of $100 (50,100 - 50,000).

Risks and Precautions

Market Volatility:

The perpetual contract market is highly volatile, which may result in potential losses from arbitrage transactions.

• Transaction Fees: Arbitrage trading involves multiple transactions and may incur transaction fees.
• Liquidity: Some perpetual contract markets may be less liquid, which may make it difficult to execute trades.
• Leverage Risk: Perpetual contract trading involves leverage, which may amplify potential losses.

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