Equity Perps Explained: How They Work & Advantages

TL;DR Definition

Equity Perps (or Equity Perpetual Swaps) are synthetic derivatives that let you get leveraged exposure to traditional stock or indices (Apple, Tesla, SPY, Nvidia, etc.) on crypto-native platforms. They never expire, trade 24/7, with up to 20x leverage, and settle in crypto – trade equities without having to sell your crypto. Think of them as perpetual futures on stocks, but without ever owning the actual shares and with all the flexibility of crypto.

How Do Equity Perpetuals Actually Work?

First, a quick refresher: What are crypto perpetuals?

Crypto perpetuals (invented by BitMEX in 2016) are futures contracts with no expiry date. To keep the contract price anchored to the spot price of Bitcoin or Ethereum, exchanges use a mechanism called the funding rate –  long traders periodically pay short traders (or vice-versa) depending on whether the perp is trading above or below spot. This keeps everything in line without forced settlements.

Learn more about crypto perpetuals features and use cases here.

So what’s the difference between crypto perps and equity perps?

The mechanics are almost identical. The only real difference is the underlying asset:

In short: equity perps bring the crypto trading experience to traditional assets.

Benefits of Equity Perps

24/7 trading

US Stock markets typically close at 4 p.m. ET and are shut on weekends. Earnings reports, Fed announcements, and geopolitical shocks don’t wait for the Monday morning opening bell. With equity perps you can react the moment Elon tweets or CPI drops.

Leverage Trading Advantage

Many TradFi platforms offer a maximum of 4x leverage for stocks. With Equity Perps, leverage can go up to 20x on BitMEX. 

Global, permissionless access

No SSN, no W-8BEN, no pattern day trader (PDT) rule. If you have a wallet and crypto, you can trade Tesla from Singapore, Buenos Aires, or Lagos at 3 a.m – whenever. wherever. 

Hedge your portfolio and actually get paid to do it

When everyone is bullish on Nvidia and the perp trades at a premium, shorts collect positive funding rates — traders can earn yield for hedging their stock position.

Goodbye short restrictions

High borrowing cost, supply controlled by counterparties, and recall risk makes shorting stock structurally challenging for equity traders. With Equity Perps, users can long and short without expiration. 

How Equity Perps Pricing Actually Works

Platforms build a reliable price feed using data from major brokers and exchanges (think NASDAQ, NYSE, CBOE, etc.).

When traditional markets are open

BitMEX Equity Perp price index tracks the live spot prices closely to reflect a robust underlying price by referencing TradFi data through oracles like Pyth. It’s crucial to read the index methodology, as other platforms typically rely heavily less on traditional data and more on tokenised stocks (e.g. xStocks). 

When traditional markets are closed

Equity Perps platforms typically rely on alternative reference feeds such as tokenised stocks, after-hour venues, and equity futures markets. When external inputs are unavailable, platforms rely on internal order books with a price band and employ internal algorithms to smooth out prices.

The beauty of trading outside of hours lies in the opportunities for price discovery and risk management, as the price can still move in response to relevant market activity. Traders actively bet on news, futures movements, or overseas markets. For instance, Apple perps might move in response to a Taiwan Semiconductor earnings report during Asian hours. 

The Risks with Equity Perps 

• Leverage is a double edge sword – 20x means a 5% move against you wipes out your position.

• Funding rate risk – in strong bull markets you can bleed heavily if you’re long. However, extreme funding rates are often short-lived based on our derivatives report here. 

• Counterparty risk – you’re trusting a centralised exchange (Bybit, Binance, Hyperliquid, etc.). History shows they can restrict withdrawals or liquidate users during volatility. It’s important to use a trusted battle-tested exchange like BitMEX built for scale. 

• Oracle/lagging price risk – during fast markets or low liquidity hours, the index price can lag or manipulate briefly hence why it’s important to choose a platform that relies more on traditional markets data like BitMEX.

FAQs

Can I trade stocks over weekends or when the market is closed?

Yes, Equity Perps runs 24/7/365  – even when markets are closed. Equity Perps are synthetic derivatives that let you get leveraged exposure to traditional stock or indices (Apple, Tesla, SPY, Nvidia, etc.) on crypto-native platforms. They never expire, trade 24/7, and settle in crypto. 

What’s the difference between tokenised stock and Equity Perps? 

Tokenised stocks represent real-world shares held by a custodian, granting ownership and rights like voting. Whilst equity perps are derivative contracts that only track the price of the underlying stock without any ownership rights and relying on external price feeds and funding mechanism to align prices.

Is it better to trade stocks or Equity Perps?

It depends on your goal. If you want dividends, voting rights, and long-term ownership — buy the actual stock (or ETF). If you want leverage, 24-hour access, shorting without constraints, and pure price speculation – perps win hands down. Most people end up using a combination of both.

Do I own the underlying asset when I trade Equity Perps?

No. You have pure synthetic exposure. No shares in your name, no dividends (some platforms pay synthetic dividends, but it’s not the same), and no shareholder rights.

What does “perpetual” mean in stocks?

Careful – “perpetual” has multiple meanings. Perpetual preferred stock or perpetual bonds are completely different (they’re fixed-income instruments with no maturity). In the context of equity perps, “perpetual” simply means the contract has no expiration date, just like crypto perps.

How do you actually make money with equity perps?

Same three ways as any derivative:

1. Directional bets (long or short)

2. Collecting funding rates by being on the less-crowded side

3. Arbitrage between the perp price and the underlying stock/ETF price when discrepancies appear.

Is perpetual trading risky?

For beginner traders, trading with leverage is risk. The same tools that let a skilled trader turn $5k into $50k in a week can also turn it into $0 in an hour. Treat it like options trading on steroids: size appropriately, use stop-losses, and never allocate money you can’t afford to lose.

Equity Perps aren’t going to replace traditional stock investing, but for active traders they’re one of the most exciting developments since the invention of ETFs. The lines between Wall Street and Crypto are blurring faster than most people realise — and right now, anyone with a wallet can sit at the new table.