What is Index Price?
Index price is a weighted average price calculated from multiple spot exchanges to create a reliable reference price for derivatives trading. It helps prevent market manipulation and provides a stable basis for mark price calculations and funding rate determinations.
Calculation Method
Components
- Spot exchange prices
- Volume weighting
- Time weighting
- Exchange reliability
- Price anomaly filtering
Quality Factors
- Exchange selection
- Data freshness
- Manipulation resistance
- Price deviation limits
Applications
Market Functions
- Mark price calculation
- Funding rate determination
- Fair value reference
- Settlement price basis
Trading Impact
- Position valuation
- Risk assessment
- Strategy planning
- Arbitrage opportunities
Related Terms
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