Stress test — funding flips negative
Same trade, same fees, but funding runs negative for the whole period instead. This is the regime-flip risk, not a forecast.
| Scenario | Funding rate | Net P&L | Net APY |
|---|
Why the leverage number doesn't mean what it usually means
In a directional trade, leverage multiplies your risk. Here it doesn't — the short perp leg is offset one-for-one by the spot leg regardless of the leverage on the perp margin, so price moves cancel out either way. What leverage actually changes is capital efficiency: at 1x, half your capital sits idle as perp margin earning nothing; at 5x, only a sixth of it does, freeing the rest. The real risks are funding turning negative (see the stress table above), a liquidation on the thinly-margined perp leg if you push leverage too high without buffer, and exchange/custody risk on wherever the spot and perp legs are held. See Cash-and-Carry Arbitrage for the equivalent trade using quarterly futures basis instead of ongoing funding.
The fee drag nobody quotes in the headline "funding APY"
Most funding-rate content quotes an annualized number straight from the current 8-hour rate — multiply by 3 (fundings per day) and by 365, and call it the APY. That number ignores two things this calculator doesn't: the round-trip trading fee on both legs (you pay to enter and, eventually, to exit both the spot buy and the perp short), and the fact that only a fraction of your total capital is actually earning funding — the rest sits as unused perp margin buffer or spot slippage cushion depending on your leverage choice. At low leverage and a thin funding rate, fees alone can eat a third or more of the theoretical yield; the break-even funding rate shown below is the actual floor your trade needs to clear before it's worth doing at all.
The other thing headline APY numbers skip is that funding is not fixed income. It reprices every 8 hours based on whether perp longs or shorts are more crowded, and it can and does flip sign — often fast, usually right when a liquidation cascade or a sharp move makes everyone want to be short at once. A rate that's paid consistently for two weeks can go negative overnight. That's why this calculator runs the negative-flip stress case alongside the base case instead of just showing one optimistic number.