What Are Equity Perpetual Futures?

Key Facts

• Unlike traditional futures, equity perps have no fixed expiration or settlement date.
• Traders can go long or short without buying or borrowing the underlying shares.
• A funding mechanism helps keep the perpetual contract aligned with its underlying reference price.
• Holding an equity perp does not provide shareholder ownership, voting rights or a direct dividend entitlement.
• Some equity perps trade when the underlying stock market is closed, but off-hours trading may have lower liquidity and weaker price discovery.

What is an equity perpetual future?

An equity perpetual future is a derivative contract that tracks the price of a listed stock or equity index without an expiration date and without transferring ownership of the underlying shares. Traders post collateral, open a long or short position, and hold it indefinitely. A periodic funding payment between longs and shorts keeps the contract price anchored to the reference stock price. Equity perps are also called stock perpetual futures, or stock perps.

The design comes from crypto markets, where perpetual contracts have been the dominant derivative structure for years, and was applied to equities from early 2026. What carries over is the absence of expiry and the funding mechanism. What changes is the underlying: a stock market that closes at night and on weekends, sitting beneath a contract that never does.

How Do Equity Perpetual Futures Work?

An equity perp combines a reference price, margin, leverage and funding. Understanding how these components interact is essential before evaluating a position.

Index price

The index price is the venue's estimate of the value of the underlying stock or ETF. During regular market hours, it may be calculated from one or more external equity market data sources. The exact methodology varies by contract and trading venue.

Mark price

The mark price is the reference price used to calculate unrealized profit and loss, margin requirements and liquidation risk. It may differ from the most recent trade in the perp order book. This helps reduce the effect that a brief or isolated trade could have on margin calculations.

Margin and leverage

Margin is the collateral supporting the position. Leverage allows the notional value of a position to be larger than the collateral allocated to it.

For example, $1,000 of margin supporting a $5,000 position represents 5x leverage. A 2% move in the underlying reference would produce approximately $100 in profit or loss before funding and trading fees. That equals 10% of the initial margin.

Leverage amplifies losses as well as gains. A position can be liquidated before the underlying asset moves by the full amount implied by its leverage because maintenance margin, funding, fees and other account positions also affect the liquidation threshold.

Funding rate

Because an equity perp has no expiration date, it cannot rely on final settlement to converge with the underlying market. Instead, funding payments create an incentive for traders to bring the contract price back toward its reference price.

When a perp trades above its reference price, long positions will generally pay short positions. When it trades below the reference price, short positions will generally pay long positions. The direction, calculation and interval depend on the venue and contract specifications.

Funding is separate from trading fees. It can be either a cost or a payment received, and it can materially affect a position held across multiple funding intervals.

Equity Perp Example

Assume a stock is trading at $100 and a trader opens a $5,000 long equity perp position using $1,000 of margin.

The profit or loss is based on the $5,000 notional position, not only the $1,000 of margin. Actual results also depend on the entry and exit prices, funding payments, trading fees and any slippage.

What is a funding rate on an equity perp?

A funding rate is the periodic payment exchanged between long and short position holders that keeps an equity perp priced near the underlying stock. It is not a fee paid to the exchange. It moves between traders, and its sign flips with market positioning.

The CFTC's June 2026 policy statement on perpetual contracts explains the logic directly: a perpetual has no fixed expiration through which it can converge on spot, so it needs a substitute mechanism to maintain price parity. Funding is that substitute. When the perp trades persistently above the index, longs pay shorts. When it trades below, shorts pay longs.

Intervals vary by venue, commonly hourly or every eight hours. Two consequences follow. A position held through many intervals accumulates funding cost or income that can matter more than the price move itself. And persistent positive funding signals crowded long positioning, which is information in its own right.

One quirk applies to equity perps specifically. US stock markets close, but funding does not. Anyone holding through a Friday close should know how their venue treats funding while the cash market is shut, since the index the contract is converging on is no longer being validated by a live market.

How are equity perps different from crypto perps?

Mechanically they are the same instrument. Anyone who has traded a BTC perpetual already understands the structure. Everything that makes equity perps their own product comes from one fact: the underlying market closes.

The practical consequence is that risk is not evenly distributed across the week. A crypto perp carries roughly the same risk on a Saturday as on a Tuesday. An equity perp does not.

What happens to an equity perp when the stock market is closed?

The contract keeps trading, and for most traders that is the entire point. What happens inside the off-session band is genuine price discovery, just conducted by a smaller set of participants than during the session.

That window is also when a good deal of the information arrives. Earnings are released after the bell. Policy and geopolitical news does not wait for New York to open. A US-listed semiconductor name can move on a supplier's results reported during Asian hours. For anyone trading from Asia or Europe, off-session hours are simply working hours, and an equity perp is the instrument that lets them act then rather than queue an order for the next open.

The tradeoff is that liquidity is thinner and the price can drift from where the stock actually reopens. Analysis of June 2026 data found spreads between the same equity perp on different venues, including a gap on SK Hynix contracts that widened to as much as 2.3%. Position sizing over a weekend deserves more care than the same position mid-week.

How Do Equity and ETF Perps Work on Backpack?

Backpack offers 24/7 perpetual futures markets tied to individual stocks and ETFs. Eligible users can take long or short positions with leverage of up to 10x on supported markets, funding exchanged hourly, and PnL settled in USD.

These are derivative contracts. They give exposure to the price of the referenced stock or ETF, but they do not represent ownership, voting rights or a direct entitlement to dividends.

Collateral and capital efficiency

Equity and ETF perps sit inside Backpack's unified margin account, where one pool of collateral supports spot, perps and borrow positions at the same time. Two things follow from that:

• Eligible stock and ETF holdings count toward the collateral pool. A position in the underlying can support a perp position instead of sitting idle beside it, which is what makes hedging an existing holding practical rather than a matter of funding two separate balances.
• Capital keeps working while a position is open. Unrealized PnL is cycled into the lending pool and earns yield, and eligible assets continue to earn through auto-lend while they serve as margin.

Why Do Traders Use Equity Perps?

Equity perps can serve several purposes, but each involves risk.

• Long exposure. A trader can take a leveraged position when expecting the reference price to rise.
• Short exposure. A trader can take a position that gains if the reference price falls without borrowing the underlying shares.
• Off-hours positioning. A continuously traded contract may allow a response to news outside regular stock-market hours.
• Hedging. A trader may use a short perp to offset some price exposure elsewhere in a portfolio, although basis and liquidation risk can make the hedge imperfect.
• Capital efficiency. Margin can support exposure larger than the collateral allocated to the position, which increases both potential gains and potential losses.

These are descriptions of how the instrument may be used, not recommendations to open a position.

What are the risks of trading equity perps?

The risks are the standard leveraged-derivatives set, sharpened by the fact that the underlying market closes and the contract does not.

• Liquidation. On a 10x position, a 10% adverse move wipes out the margin. The SEC's guidance on margin accounts states plainly that an investor may lose more than the amount initially invested.
• Funding drag. A correctly directional position can still lose money if funding runs against it for long enough.
• Gap risk. A stock that reopens at a very different price after earnings or overnight news drags the perp with it, and there is no way to exit at the closed-market price.
• Corporate action risk. Stock splits, mergers, and delistings affect the underlying, and venues handle them differently. Check the policy before holding through a scheduled corporate action.
• Venue risk. Margin, liquidation, and index methodologies differ substantially between platforms and are not standardized the way cleared futures are.