An inverse contract is a derivative commonly quoted with a fixed dollar face value whose profit and loss are calculated and settled in the underlying coin. Its coin-denominated payoff uses reciprocal prices, unlike a linear contract’s simple price difference. The contract specifications determine the exact face unit and multiplier.
Why the calculation is inverse
For a common BTC inverse structure, a long’s gross BTC profit equals total dollar face value multiplied by the difference between the reciprocal entry price and reciprocal exit price. A short reverses that difference.
Suppose a long has 10,000 USD of face value, enters at 50,000 USD per BTC and exits at 62,500 USD per BTC. Gross profit is 10,000 × (1/50,000 − 1/62,500), or 0.04 BTC. This hypothetical example excludes fees, funding and changes in collateral value.
Two kinds of price exposure
As BTC’s dollar price changes, both the position’s coin value and the dollar value of coin collateral can change. A coin profit is therefore not a complete statement of the account’s dollar return.
Inverse contracts can have an expiry or be perpetual; the latter commonly adds funding. Some account systems accept alternative collateral, so “inverse” identifies the payoff structure more reliably than the complete collateral policy. Margin, liquidation and settlement details still require the relevant product rules.