Read the fixed opening-exposure assumption
The model starts both legs at the same implied opening price. Equal initial spot and short notionals therefore represent equal base quantities. Unequal notionals leave a directional imbalance. Those opening quantities stay fixed throughout the scenario rather than being adjusted as prices move.
Spot price profit is initial spot notional multiplied by the spot percentage move as a decimal. Short perpetual price profit is minus the initial short notional multiplied by the sum of the spot move and the extra perpetual move. The calculation is for linear price exposure, not an inverse contract.
An extra move is measured in percentage points
The extra perpetual move is a difference from the spot move, measured against the common opening price. If spot falls 10% and the extra perpetual move is positive 2 percentage points, the perpetual falls 8%. It is not a 2% change applied to the already reduced spot price.
With matching initial notionals and no extra move, price gains and losses offset before funding and costs. A positive extra perpetual move hurts the short relative to spot; a negative extra move helps it. A hedge can therefore lose value even when its initial directional exposure is balanced.
Keep funding and margin separate from price profit
Funding uses the initial short notional, the entered interval rate and the proportional number of intervals in the holding period. Positive funding is received by the short and negative funding is paid. Add that cash flow to the two price results and subtract the entered costs.
The model holds initial notional constant for funding and does not simulate changing mark prices at settlement. It also does not determine whether margin remains adequate along the price path. Cash gains on the spot leg may not be available automatically to meet obligations on the perpetual venue.
Questions about this tool
Does this calculator model different spot and perpetual entry prices?
No. It assumes equal initial prices and represents the legs through their opening notionals. Equal notionals imply equal base quantities only under that assumption. A hedge opened with a premium needs a model that accepts both entry prices.
Can the hedge lose money when Bitcoin barely moves?
Yes. The perpetual basis can move against the short, trading costs can exceed funding receipts, or funding itself can become a payment. A small spot-price change does not imply a small combined result.