Crypto derivatives are a powerful tool for traders and investors, offering leverage, hedging opportunities, and risk management capabilities. The article explains the basics of linear and inverse contracts, including margin currencies, settlement, and PnL.
It also covers pricing and valuation, including contango, backwardation, implied volatility, and the Greeks. Additionally, it discusses risks traders face, such as leverage and liquidation, funding rate drag, volatility spikes, basis risk in hedges, regulatory and platform risk.