# Crypto Derivatives

> A Claude skill from brainbytes-dev/everything-claude-trading.

- **Type:** Skill
- **Install:** `agentstack add skill-brainbytes-dev-everything-claude-trading-crypto-derivatives`
- **Verified:** Yes — security-reviewed for prompt injection and unsafe behavior
- **Seller:** [brainbytes-dev](https://agentstack.voostack.com/s/brainbytes-dev)
- **Installs:** 0
- **Category:** [Finance & Payments](https://agentstack.voostack.com/c/finance-and-payments)
- **Latest version:** 0.1.0
- **License:** MIT
- **Upstream author:** [brainbytes-dev](https://github.com/brainbytes-dev)
- **Source:** https://github.com/brainbytes-dev/everything-claude-trading/tree/main/skills/crypto/crypto-derivatives

## Install

```sh
agentstack add skill-brainbytes-dev-everything-claude-trading-crypto-derivatives
```

Requires the [AgentStack CLI](https://agentstack.voostack.com/docs/cli). Works with Claude Code, Cursor, and any MCP-compatible agent.

## About

# Crypto Derivatives

## When to Activate
- Analyzing perpetual swap mechanics, funding rates, and basis trading opportunities
- Evaluating crypto futures across venues (CME, Deribit, Binance)
- Designing funding rate arbitrage or basis trading strategies
- Assessing crypto options strategies and volatility trading
- Understanding liquidation cascades and their market impact

## Core Concepts

### Perpetual Swaps

**Mechanics:**
- No expiry date — positions can be held indefinitely
- Price tracks spot via funding rate mechanism
- Funding rate: periodic payment between longs and shorts
- Positive funding: longs pay shorts (perp > spot, bullish bias)
- Negative funding: shorts pay longs (perp  spot; cost of carry + demand premium
- Backwardation (unusual in crypto): futures  long-dated IV (during acute stress or event risk)
- Event-driven: IV spike around halving, ETF decisions, macro events

Skew analysis:
- Call skew > put skew: bullish sentiment (demand for upside exposure)
- Put skew > call skew: hedging demand (typical in equities, less consistent in crypto)
- Monitor 25-delta risk reversal: calls - puts, positive = call skew dominance
```

### Liquidation Cascades

**Cascade Mechanics:**
```
1. Price moves against leveraged positions
2. Positions hit liquidation price
3. Exchange force-closes positions at market
4. Forced selling pushes price further
5. More positions hit liquidation
6. Feedback loop accelerates price movement

Liquidation data sources:
- Coinglass: real-time liquidation data across exchanges
- Exchange APIs: open interest changes signal liquidation events
- On-chain: DeFi liquidations are publicly visible

Key metrics:
- Open interest / market cap ratio: >5% signals crowded positioning
- Estimated liquidation levels: cluster analysis of likely stop/liquidation prices
- Funding rate extremes: >0.1% per 8h = over-leveraged longs
```

**Trading Around Liquidation Events:**
```
Signal: Large liquidation cluster identified at $45,000 (BTC)
Open interest: $20B, estimated $3B in long liquidations between $45K-$43K

If price approaches $45K:
- Expect acceleration through liquidation zone
- Cascading liquidations may push price to $43K briefly
- Buy orders placed at $42,500-$43,000 (below liquidation cascade)
- Stop below $41,000 (next major liquidation cluster)
- Target: $46,000-$48,000 (recovery after cascade exhaustion)

Risk: cascade can extend further than expected if market structure is fragile
```

## Methodology

### Basis Trade Execution
1. **Monitor funding rates** across exchanges (Coinglass, exchange APIs)
2. **Calculate expected return** — average funding over 30-day lookback, annualize
3. **Assess margin requirements** — need 2-3x maintenance margin buffer for volatile moves
4. **Execute delta-neutral** — match spot purchase with perp short simultaneously
5. **Monitor continuously** — rebalance if delta drifts; add margin if needed during rallies
6. **Exit criteria** — funding turns negative for 3+ consecutive periods, or better opportunity elsewhere

### Options Strategy Selection
```
Directional + vol view -> strategy:
- Bullish + long vol: buy calls, bull call spread
- Bullish + short vol: sell puts, short put spread
- Bearish + long vol: buy puts, bear put spread
- Bearish + short vol: sell calls, short call spread
- Neutral + long vol: straddle, strangle
- Neutral + short vol: iron condor, iron butterfly

Sizing: options positions sized at 1-3% of portfolio per trade
Expiry: 30-60 DTE for most strategies (balances theta and gamma)
```

## Examples

### Example 1: Funding Rate Arbitrage
```
Current state:
- BTC spot: $50,000
- BTC perp funding (Binance): 0.04% per 8h (bullish market)
- Annualized: 43.8%

Execution:
- Deposit $55,000 to exchange (10% buffer for margin)
- Buy 1 BTC spot: $50,000
- Short 1 BTC perp: 2x leverage (margin: $25,000)
- Total capital deployed: $75,000

Daily income: $50,000 * 0.04% * 3 = $60/day
Monthly income: ~$1,800
Return on capital: 1,800 / 75,000 = 2.4% monthly = 28.8% APY

Risk management:
- If BTC rallies 30%: short perp unrealized loss = $15,000
  Offset by spot gain of $15,000. Need margin for perp.
  $25,000 margin - $15,000 loss = $10,000 remaining (above maintenance)
- Add margin alert at $58,000 BTC price
```

### Example 2: Liquidation Cascade Trade
```
Setup:
- BTC at $48,000 after steady rally
- Open interest at all-time high: $25B
- Funding rate: 0.08% per 8h (extremely high)
- Estimated long liquidation cluster: $44,000-$46,000 (~$4B)

Strategy: Short-term reversal trade
- No position above $46,000 (wait for cascade)
- Limit buy orders laddered: $45K (25%), $44K (25%), $43K (25%), $42K (25%)
- Stop loss: $40,000 (below next cluster)
- Take profit: scale out $47K-$50K

Execution:
- Price drops to $46K, liquidations begin cascading
- Fills at average $43,800
- Bounce to $48,000 within 12 hours as leverage is flushed
- Exit at $47,500 average
- Return: 8.4% in 12 hours
```

### Example 3: BTC Options Straddle
```
Event: Bitcoin halving in 2 weeks
BTC spot: $60,000
30-day ATM IV: 85% (elevated due to event)

Sell straddle (vol too expensive):
- Sell $60K call (14 DTE): premium $3,500
- Sell $60K put (14 DTE): premium $3,200
- Total premium collected: $6,700
- Breakeven range: $53,300 - $66,700 (±11.2%)

Post-event: IV likely to crush from 85% to 60%
If BTC stays within range: capture full premium
If BTC moves ±10%: partial loss, offset by IV crush

Alternative (less risk): sell strangle at 10-delta
- Sell $70K call + $52K put
- Lower premium ($2,500) but wider profit range
```

## Quality Gate

Before trading crypto derivatives, verify:

- [ ] Exchange counterparty risk assessed — use regulated venues for large positions, diversify across exchanges
- [ ] Margin requirements calculated with buffer — 2-3x maintenance margin minimum for volatile markets
- [ ] Funding rate analysis uses sufficient lookback period (30+ days) — do not extrapolate from short window
- [ ] Basis trade delta is monitored and rebalanced — drift beyond 5% requires adjustment
- [ ] Liquidation levels are mapped — know where cascades will occur above and below current price
- [ ] Options positions are sized conservatively — max 1-3% of portfolio per trade, defined max loss
- [ ] IV analysis uses historical context — is current IV high or low relative to realized vol?
- [ ] Correlation between spot and derivatives positions is verified — inverse contracts have convexity risk
- [ ] Withdrawal capability confirmed — can you exit the exchange quickly if needed?
- [ ] Tax implications considered — derivatives have different tax treatment in most jurisdictions

## Source & license

This open-source skill is cataloged on AgentStack and links to its original source — we do not rehost the code.

- **Author:** [brainbytes-dev](https://github.com/brainbytes-dev)
- **Source:** [brainbytes-dev/everything-claude-trading](https://github.com/brainbytes-dev/everything-claude-trading)
- **License:** MIT

Install and usage instructions live in the source repository linked above.

## Pricing

- **Free** — Free

## Security capabilities

Automated source analysis of v0.1.0 — what this tool can access:

- **Network access:** no
- **Filesystem access:** no
- **Shell / process execution:** no
- **Environment & secrets:** no
- **Dynamic code execution:** no

*"Yes" means the capability is present in the source — more access means more to trust, not that it is unsafe.*


## Versions

- **0.1.0** — security scan: passed — Imported from the upstream source.

## Links

- Listing page: https://agentstack.voostack.com/l/skill-brainbytes-dev-everything-claude-trading-crypto-derivatives
- Seller: https://agentstack.voostack.com/s/brainbytes-dev
- Browse the marketplace: https://agentstack.voostack.com/browse

---
Listed on AgentStack — the marketplace for AI agent skills and MCP servers. Every listing is security-reviewed. Creators keep 70%.