I’m not @xorfish, but I followed your advice.
Carry trading, or cash and carry arbitrage, is a market-neutral strategy that exploits inefficiencies in the spot and the futures market. It combines a long position in the spot market and a short position in futures when the market is in contango – a condition where the future prices of an underlying asset are higher than the current spot price. As expiration nears, the premium evaporates; on the day of the settlement the futures price converges with the spot market price, generating relatively riskless returns.
From my humble POV, this is one of the biggest risks here. Unless you want to trade BTC futures on CME, you’ll have Binance, Deribit or some other crypto exchange as your counterparty.
Problem with CME is that one BTC future contract is 5 BTC, which means you need ~200k USD to buy the BTC in the spot market first. Personally, I would trust CME much more than any crypto exchange (we’re talking different galaxies here).
If you are trading futures on crypto exchanges, contract sizes of 1 BTC seem to common (that’s just a rough check, maybe they have smaller contract sizes as well). The problem is that you have to use the BTC as collateral. If you use 100%, you don’t have any liquidation price. If you use leverage instead, your position might be liquidated by strong price changes in BTC.
Personally, I wouldn’t leave more than 5k or maximum 10k equivalent USD on any exchange, but that’s just me.
As of right now, only the futures from Feb. 2022 are selling for a notably higher premium than the current spot price (on CME). So you would need to block 200k for almost half a year. But that’s just a high-level view of the whole thing. The premiums I found on CME are options, not the futures themselves. Will need to read a little bit more about that.
On a side note: tax offices might treat you as a professional trader and tax you differently. But I’m sure you know all of that already.