# Forwards

## Forwards Overview

A **Forward** is a contract where the user agrees to **buy or sell an asset at a fixed price and date** in the future. Gain or loss depends on the difference between the agreed price and the market price at expiry.

## Placing Forwards Orders

<figure><img src="https://4105275983-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FveNlPcq5FcdKaOERYyrV%2Fuploads%2FyCoLeOmeBdMqSLcXYVeR%2Fimage.png?alt=media&#x26;token=a2e8933c-efdd-47b2-86fc-be7d8ec94aa1" alt=""><figcaption></figcaption></figure>

1. In the **Market** tab, select Forwards
2. Enter your order parameters
   * **Type:** Next Auction or Ithaca Expiry
   * **Side:**  "+" indicates a LONG/BUY position on the contract selected, "–" indicates a SHORT/SELL position on the contract selected.&#x20;
   * **Size:** The exposure equivalent of your desired asset. Entering 1 means you are trading a  contract for one unit of the underlier&#x20;
   * **Unit Price:** This is the order limit price which will be entered into the auction. The system feeds a  suggested price, which is a theoretical mid price based on Ithaca protocol proprietary pricing model: these prices are not tradable neither are they guaranteeing a fill of entered. These prices are meant to help anchor a limit price to be entered that may have higher probability of a match.&#x20;
3. Verify Order Summary
   * Order limit: Order price
   * Collateral requirement: The amount required to be locked so as to ensure that the order enters the auction.&#x20;
   * Platform fee: Fee to be paid in case of execution.&#x20;
   * Total premium: The total to be paid net of fees.&#x20;
4. "Submit to Auction" and approve your transaction in your wallet

A user entering an order to long one Forward of strike K will have to post an amount of K USDC as collateral.

A user entering an order to short one Forward of strike K will have to post an amount of one ETH as collateral.

{% hint style="info" %}
\+ Next auction forward will mean using USDC at unit price to go long ETH. This is the equivalent of going long ETH on a 'spot' basis in an unmargined world.

\- Next auction forward means using ETH at unit price to go long USDC | short ETH.

\+ Dated forward means taking delivery of ETH at expiry at entered unit price. User decides the unit price at which user is willing to go long ETH at expiry date.
{% endhint %}

## Forwards Contract

<table><thead><tr><th width="202">Item</th><th>Description</th></tr></thead><tbody><tr><td>Products</td><td><p>Next ( focal ) auction forward</p><p>Dated ( defined expiry ) forward</p></td></tr><tr><td>Payout Formula</td><td><p>Long: reference price - strike </p><p>Short: - ( reference price - strike )</p></td></tr><tr><td>Underlying</td><td>WETH/USDC</td></tr><tr><td>Settlement Style</td><td>Ithaca settlement</td></tr><tr><td>Exercise Style</td><td>European, auto-exercised</td></tr><tr><td>Settlement Currency</td><td>WETH</td></tr><tr><td>Strike Currency</td><td>USDC</td></tr><tr><td>Collateral Currency</td><td>WETH for short; USDC for long</td></tr><tr><td>Collateral Amount</td><td>1 WETH for short, strike USDC for long</td></tr><tr><td>Collateral Management</td><td>Fully collateralized, pre-funded</td></tr><tr><td>Multiplier</td><td>1</td></tr><tr><td>Strike Price</td><td>Fixed standardized published levels</td></tr><tr><td>Reference Price</td><td>ITHACA Reference Fixing</td></tr><tr><td>Expiry Dates</td><td>1st focal auction on relevant expiry Friday</td></tr></tbody></table>
