Inverse Contract Calculator
Calculate profit on a coin-margined inverse contract, where the payout is in the asset whose price is moving.
An inverse contract is priced in one currency and settled in another. A BTC-margined contract is quoted in dollars, but the margin you post and the profit you receive are both in bitcoin, so this inverse contract calculator reports BTC-margined contract profit in coin rather than in the dollars the price is quoted in.
Formula: profit = contracts x value x (1/entry - 1/exit)
Your figures
In the quote currency — commonly $100 or $1 per contract.
Optional — converts the base-asset result into your account currency.
Results
Profit in the base asset
0.01818182
on a +10.00% price move
- Position valueIn the quote currency the contract is priced in.
- US$10,000.00
- Position value in the base assetAt the entry price — this is what is actually at stake.
- 0.2
- Price move
- +10.00%
- Return on the base at risk
- +9.09%
- Maximum possible gainA long's gain is capped at its own base notional, however far price rises.
- 0.2 base
- Maximum possible lossA long's loss grows without limit as price falls towards zero.
- Unbounded
What this means
An inverse contract is priced in one currency and settles in another, so the payout is denominated in the asset whose price is moving. That makes profit a function of 1/price rather than of price, and the consequences are asymmetric: this long can gain at most 0.2 in base terms however far price rises, while its loss grows without limit as price falls. Sizing an inverse position with a linear rule mis-sizes it.
- Contract values, tier schedules and margin levels differ by venue and by account tier, and venues change them. Take every figure from your own venue's contract specification. No venue's schedule is preset here: the tiers and levels a field opens with are round illustrations, chosen for their shape rather than copied from anywhere.
- Excludes funding, trading fees and the spread, which are charged separately on perpetual inverse contracts.
- The base-asset result is itself exposed to the base asset's price. Profit measured in coin can shrink in account-currency terms if the coin falls.
Profit in the base asset: 0.01818182
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Continue with these figures
About the Inverse Contract calculation
That single fact changes the mathematics completely. Because the payout is denominated in the asset whose price is moving, inverse futures PnL depends on the reciprocal of price rather than on price itself — and a reciprocal is not a straight line.
The consequence is convexity, and it runs in the direction most traders do not expect. A long inverse position has a hard ceiling on what it can make in coin terms and no floor at all on what it can lose. A short is the exact mirror. This is why a coin-margined futures calculator has to work from the reciprocal directly: sizing either side with a rule borrowed from linear contracts produces the wrong size.
Inverse Contract formula
notional (quote) = contracts × value per contract
notional (base) = notional (quote) ÷ entry price
long profit = contracts × value × (1/entry − 1/exit)
short profit = contracts × value × (1/exit − 1/entry)
as exit → ∞ : long profit → notional (base)
as exit → 0 : long loss → unbounded- quote currency
- What the contract is priced in, usually dollars.
- base asset
- What margin is posted in and profit is paid in — the coin.
- value per contract
- Quote-currency size of one contract, commonly $100 or $1.
Work through the asymptotes and the asymmetry becomes obvious. For a long, profit is contracts × value × (1/entry − 1/exit). As the exit price rises without bound, 1/exit vanishes and profit approaches contracts × value ÷ entry — which is exactly the position's own base notional. The gain is capped at the coin you had at risk, however far price rises.
Falling price does the opposite. As exit approaches zero, 1/exit grows without bound and so does the loss. A long inverse position can lose many multiples of its base notional, which is why liquidation on these contracts arrives faster than linear intuition suggests.
A short reverses both. Its loss is capped at its base notional and its gain is unbounded as price falls towards zero. This is the structural reason inverse contracts have historically appealed to holders wanting to short against a coin position.
None of this says an inverse contract is worse or better than a linear one. It says the payoff is a different shape, and a position sized as though it were linear is not the position you think you have.
Inverse Contract: a worked example
100 contracts at $100 each, long, entered at 50,000 and exited at 55,000 on a coin-margined contract.
- Notional in quote100 × $100 = $10,000
- Notional in base10,000 ÷ 50,000 = 0.20000000
- Reciprocal move1/50,000 − 1/55,000 = 0.00000182
- Profit in base10,000 × 0.00000182 = 0.01818182
- Return on base at risk9.09%
- Maximum ever achievable0.20000000 base — the whole notional
A 10% price rise returns 9.09% in coin terms, not 10%. And however far price rises from here, this position can never gain more than 0.2 coin in total.
How to use the Inverse Contract calculator
- Enter the number of contracts and the quote-currency value of each, from the venue's contract specification.
- Enter entry and exit prices in the quote currency the contract is priced in. Used as an inverse perpetual calculator, put the current mark price in the exit field to value a position that is still open.
- Set the direction. The convexity runs in opposite directions for a long and a short, and the bounds swap over.
- Add the base asset's rate against your account currency to see the result in money rather than coin.
- Read the maximum gain and loss rows. They are the clearest statement of what the contract can actually do.
Limitations of the Inverse Contract calculator
Every calculation makes assumptions. These are the ones that matter here.
- Excludes funding, trading fees and the spread, which are charged separately on perpetual inverse contracts.
- Assumes a single entry and a single exit. Averaging in or scaling out changes the effective entry price.
- The base-asset result carries its own price exposure. Profit measured in coin can be worth less in account terms if the coin falls afterwards.
- Does not model the venue's margin, liquidation or auto-deleveraging mechanics, which differ between venues.
Frequently asked questions about Inverse Contract
Why is inverse futures PnL smaller than the percentage the price moved?
Because the payout is in the asset whose price rose. A 10% rise returns about 9.09% in coin terms for a long, because each coin is now worth more so fewer are needed to represent the same dollar gain. The dollar value works out; the coin count does not scale one for one.
Is my gain really capped?
In coin terms, yes. A long can never gain more than the base notional it put at risk, no matter how high price goes — the formula converges to that limit. In account-currency terms the total value still rises, because those capped coins are each worth more.
Why is the downside unbounded?
As price falls, the coin value of a fixed dollar loss grows. At half the entry price the loss is worth twice as much coin; at a tenth, ten times. Since price can keep falling, the coin loss has no ceiling — which is what makes liquidation arrive sooner than linear intuition suggests.
How are coin-margined futures different from a linear contract?
A linear contract settles in the quote currency, so profit is simply the price move times the size and the payoff is a straight line. Coin-margined futures, which is the other name for inverse futures, settle in the base asset, and that curves the payoff. Same underlying, different shape.
Why do inverse contracts exist at all?
They let a trader margin and settle entirely in the coin, without touching fiat or a stablecoin. For someone who holds the asset and wants leverage or a hedge against it, that avoids a currency conversion at both ends.
Last reviewed . See our methodology and editorial policy.
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