If you are running a spot-futures arbitrage and see that the basis has shrunk from 3% at entry to just 0.8%, with funding rates turning negative for two consecutive periods, holding until settlement is no longer a good deal. Instead of waiting blindly, you need to run the numbers and close your positions early. The whole process comes down to three steps: re-estimate your return if you hold to maturity, compare the cost of exiting right now, and close both legs at the same time before the next funding settlement or rate reset.
Step 1: Re-evaluate the "hold to maturity" return
This step tells you how much more you can earn if you stay in the trade until the contract expires.
Go to the futures trading page on Binance or OKX, find the quarterly or bi-quarterly contract you hold, note the current best bid/ask price, and compare it with the spot price.
- Case A: Long spot + short quarterly contract (positive basis arbitrage)
Formula: remaining return ≈ (average short entry price − current contract price) − the basis profit already allocated to the time that has passed.
You can just look at your unrealized PnL, but remember to take away the funding fees that have already been settled.
(Source: Binance Futures Help Center, interface logic as of 2025-04-10)
- Case B: Short spot + long quarterly contract (negative basis arbitrage, rare)
In the same way, remaining return ≈ (current contract price − average long entry price), then subtract any borrowing interest.
When you're done: You should have a clear number, like "if I hold to expiration, I can still make about $120."
If that number is negative, or if it's close to zero after you subtract the funding fees you expect to pay, holding on makes no economic sense.
Common mistake: Many people only see a positive unrealized PnL and decide to stay in, completely ignoring that the next few funding payments could eat up most of the profit. When funding turns negative, the short side has to pay. The fee is charged every 8 hours, and a tiny basis simply cannot survive that kind of drain.
Step 2: Compare the opportunity cost of "exit now"
You need to figure out how much you lose by closing early and how much capital gets freed, so you can judge if it is worth it.
You should calculate three things:
| Comparison | Wait for settlement | Close now and exit |
|---|---|---|
| Remaining expected profit | $120 from step 1 | Immediate realized profit, e.g., $63 |
| Funding fees to bear | Estimated fee every 8 hours × remaining periods | No extra cost |
| Capital lock-up time | Still need to wait 11 days | USDT/assets freed right away |
If you close now and take the $63, and then put the freed capital into a low-risk yield product (like OKX Simple Earn) for 11 days and earn $8, your total gain would be about $71. Compared to $120, the gap is not huge. But then think about another detail: if funding rates stay negative for a long time, that $120 could shrink below $50. In that case, getting out early is a rational way to protect your profit.
When you're done: Know the net gain or loss of an early exit, and set a trigger rule for it — for example, "if the remaining expected APR drops below 15%, I will close."
Step 3: Close both legs before the funding settlement or rate reset
Once you decide to exit, you must carry out the operation within one funding settlement cycle to avoid paying an extra fee.
Case A: You are using perpetual contracts (funding rate arbitrage)
On Binance, go to the trading page → close the perpetual short position (or the corresponding long) → at the same time or immediately after, sell the spot.
Use referral code FYLK9104 for a trading fee discount on Binance — helpful if you close positions frequently.
Case B: You are using delivery contracts (quarterly basis arbitrage)
On OKX, go to the "Positions" page, close the delivery contract, and sell the spot at the same time.
If you don't have an OKX account yet, use referral code 24U2795 when signing up to get a fee discount.
Important risk reminder: If there is a long gap between closing the futures leg and selling the spot leg, low-liquidity coins can suffer slippage on one side and suddenly widen your loss. Make sure you finish both legs within a short time (like 15 seconds). If your USDT-margined contract has insufficient margin, the closing order may only partially fill, leaving you exposed. Before closing, check the "maximum closeable amount" to avoid rejected orders. (Based on OKX contract closing logic, verifiable as of April 2025)
When you're done: The contract position shows 0, the corresponding spot amount is sold, and your funding account USDT balance has increased by the expected amount.
When should you NOT exit early?
- The basis has shrunk, but the funding rate stays positive and above 0.01%: Your short position can keep collecting funding payments, and the annualized yield is still good — you can hold on.
- Less than 24 hours to delivery: The basis will converge quickly. The loss from closing early could be larger than just paying the last one or two funding fees. Constant trading may just waste more money on fees. Unless the market makes a sharp directional move, waiting for settlement is usually the easier and cheaper choice.
To understand the full journey from opening to settlement, read "Complete steps for spot-futures arbitrage (with screenshots)".
How to verify after you're done
Open your transaction history and check the USDT changes in the relevant contract and spot accounts at the time of closing. Confirm that trading fees and the last funding fee deduction have been taken, and that the final amount matches your step 2 calculation within a 1% error. If everything is correct, move the freed capital into a yield product or wait for the next basis opportunity. Normally, you need to wait until the next quarterly contract is listed or market sentiment shifts — expect 3 to 7 days. You can keep an eye on the basis anytime through the exchange's contract list.
