How to calculate Crypto.com contract profit

Calculating Crypto.com contract profit involves determining profit or loss based on market price and strike price, applying the profit calculation formula, accounting for funding fees, commission, and other costs.

Dec 01, 2024 at 09:58 pm

How to Calculate Crypto.com Contract Profit

Understanding how to calculate profit in Crypto.com contracts is crucial for successful trading. This comprehensive guide will provide a detailed step-by-step breakdown of the profit calculation process, ensuring that you have a clear understanding of your earnings and losses.

Step 1: Determine Your Profit

The first step in calculating your contract profit is to determine whether you have made a profit or a loss. To do this, you need to compare the current market price of the underlying asset with the strike price of your contract.

• Profit: If the current market price is higher than the strike price for a long contract or lower than the strike price for a short contract, you have made a profit.
• Loss: If the current market price is lower than the strike price for a long contract or higher than the strike price for a short contract, you have made a loss.

Step 2: Calculate Contract Profit

Once you have determined whether you have made a profit or a loss, you need to calculate the amount of profit you have earned. To do this, you use the following formula:

Profit = (Current Market Price - Strike Price) * Contract Size

• Current Market Price: The current market price of the underlying asset.
• Strike Price: The price at which you bought or sold the contract.
• Contract Size: The number of units of the underlying asset that the contract represents.

Step 3: Consider Funding Fees

In addition to the profit calculation based on the formula above, it is important to consider funding fees when calculating your overall contract profit. Funding fees are payments made between traders to maintain the fair value of a contract.

• Long Contracts: If you hold a long contract, you will pay funding fees to short contract holders if the market price is above the strike price.
• Short Contracts: If you hold a short contract, you will receive funding fees from long contract holders if the market price is below the strike price.

Step 4: Account for Commission and Other Costs

Finally, you need to account for any commission or other costs associated with your contract trades. These costs can include trading fees, spreads, and slippage. Deduct these costs from your calculated profit to determine your net profit.

Step 5: Example Calculations

• Long Contract:

• Current Market Price: $10,500
• Strike Price: $10,000
• Contract Size: 100 ETH

Profit = (10,500 - 10,000) * 100
Profit = $500

• Short Contract:

• Current Market Price: $9,500
• Strike Price: $10,000
• Contract Size: 100 ETH

Profit = (9,500 - 10,000) * 100
Profit = -$500

Conclusion

By following these steps, you can accurately calculate your profit in Crypto.com contracts. This understanding will empower you to make informed trading decisions and manage your risk effectively. Remember to consider funding fees, commissions, and other costs to ensure a comprehensive view of your profit or loss.