What does Poloniex contract delivery mean?

Poloniex facilitates seamless contract delivery processes for various contract types, encompassing perpetual futures without physical delivery and quarterly contracts with physical delivery upon expiry, catering to diverse trading strategies.

Dec 03, 2024 at 06:36 pm

Understanding Poloniex Contract Delivery Processes

Introduction to Poloniex Contract Delivery

Poloniex, a leading cryptocurrency exchange, offers a versatile platform for contract trading, enabling users to speculate on the future price of various crypto assets. Contract delivery is a crucial aspect of the contract trading ecosystem, referring to the mechanism through which the underlying asset is transferred to the trader upon contract expiration. This comprehensive guide delves into the intricacies of Poloniex contract delivery, addressing frequently asked questions and providing a detailed understanding of its processes.

Steps Involved in Poloniex Contract Delivery

1. Contract Settlement and Physical Delivery for Perpetual Contracts

• Settlement: Poloniex perpetual contracts are perpetual futures, meaning they have no set expiry date. Instead, they continuously roll over to the next contract cycle based on a funding rate system.
• Physical Delivery: As there is no underlying asset for perpetual contracts, no physical delivery occurs upon settlement. The profit or loss is realized based on the difference between the contract price at execution and the settlement price.

2. Contract Expiry and Physical Delivery for Quarterly Contracts

• Expiry: Poloniex quarterly contracts expire at a predetermined time and date. The expiry date is typically three months from the contract listing date.
• Settlement Prior to Expiry: If a trader wishes to close their position before contract expiry, they can do so by trading their position on the exchange.
• Physical Delivery upon Expiry: If a trader holds a contract position at expiry, they are obligated to receive or deliver the underlying asset, which is usually a specific cryptocurrency such as Bitcoin or Ethereum.
• Delivery Process: The delivery process involves transferring the underlying asset from the seller's wallet to the buyer's wallet at the prevailing market price on the expiry date.

3. Contract Settlement for Options Contracts

• Settlement Style: Poloniex options contracts are either European-style or American-style. European-style options can only be exercised at maturity, while American-style options can be exercised at any time before maturity.
• Physical Delivery for Options Contracts: Unlike futures contracts, options contracts do not involve physical delivery. Instead, the option premium serves as the profit or loss for the trader.
• Settlement at Option Expiry: At expiry, the option premium is settled based on the difference between the strike price and the underlying asset's market price.

4. Delivery Fees and Associated Costs

• Delivery Fees: Poloniex charges delivery fees for quarterly contracts to cover transaction costs and administrative expenses. The delivery fee structure varies depending on the contract and asset.
• Other Fees: Traders may also incur additional fees associated with trading and holding contracts, such as trading commissions, storage fees, and settlement costs.

5. Legal Implications of Contract Delivery

• Jurisdictional Regulations: Contract delivery regulations vary across jurisdictions, and traders should ensure they comply with the relevant laws and regulations in their respective locations.
• Tax Implications: Contract delivery may have tax implications, such as capital gains or income taxes. Traders should consult with tax professionals to understand the tax implications in their jurisdiction.