Home › Tools › Funding Rate Arbitrage Calculator

Funding Rate Arbitrage Calculator

Funding-rate arbitrage (cash-and-carry) collects the perpetual funding rate while staying delta-neutral — equal and opposite spot and perp positions cancel out price risk. Enter your position size, the funding rate and settlement interval, how long you'll hold, and both legs' fees — see net profit, annualized yield, and how many days it takes for funding to cover the fees.

What is funding-rate arbitrage?

Funding-rate arbitrage — also called cash-and-carry or a delta-neutral basis trade — earns the perpetual funding rate without taking on price risk. You hold two equal and opposite positions in the same asset: buy it on spot, and short an equal notional amount on the perpetual futures market (or the reverse, if funding is negative and shorts are the side getting paid). Because the spot leg and the perp leg move dollar-for-dollar against each other, the position's value doesn't change whether the price goes up, down, or sideways — the only thing left is the funding payment settling between longs and shorts every interval.

When the funding rate is positive — the normal state in a bullish market, since crowded longs pay shorts — a short-perp, long-spot position collects that payment on a schedule, typically every eight hours. That income is the "yield" of the trade, and unlike staking or lending, it isn't paid by a protocol or counterparty risk on a single platform; it's paid directly by the other side of the perp market.

What eats into the yield

Two things separate the headline funding rate from what you actually keep. First, trading fees on four fills: buying the spot leg, opening the perp leg, then closing both when you unwind — each leg typically has its own maker/taker fee. On a short holding period, these fees can consume most or all of the funding collected, which is why this calculator surfaces a break-even day count: how long the position needs to run before funding income has paid back the entry and exit costs. Second, the funding rate itself moves — it resets every settlement interval based on the live gap between perp and spot prices, so a rate that looks attractive today can compress or flip negative before your holding period ends, especially if a wave of other traders piles into the same arbitrage and pushes the perp back toward spot.

Delta-neutral is not risk-free

The strategy removes directional price risk, but not every risk. Holding the two legs on different venues (or even the same venue) means counterparty and exchange risk on each leg independently — if the exchange holding your perp short is compromised or restricts withdrawals, your spot leg is no longer actually hedged. Margin on the perp leg also needs monitoring: a sharp move can trigger a margin call or liquidation on the short even though the spot leg offsets it economically, because the two legs aren't automatically netted by the exchange. And if funding flips negative for an extended stretch, the trade that was earning starts paying — this calculator's negative-rate case shows exactly how that looks in dollar terms.

Reading the result

"Net annualized yield" scales the holding period's net profit up to a yearly rate so trades of different lengths are comparable on equal footing — treat it as a snapshot at today's funding rate, not a promised return, since funding resets constantly. If break-even shows "never," the funding rate is at or below zero (or the payments over the holding period don't clear the entered fees) — that combination of inputs loses money by design.