Leverage allows you to control a position larger than the value of the assets in your account. Leverage is the ratio between a trader’s position size and the equity used as collateral for the position.
For example, if you want to go long (buy) 10 bitcoins and only have 2 bitcoins in your account to act as margin, leverage is what allows you to open this position. In this case, you would be using 5:1 leverage (10 / 2), also sometimes referred to as 5x leverage.
Leverage is available on futures, perpetuals and options. However, it is not available on spot instruments.
How to set leverage?
On Deribit, leverage is not typically set on a per position basis, as the positions in an account share the same pool of margin. The way to control leverage is by controlling the position size and margin in the account. To isolate a position, and control the leverage for that specific position only, subaccounts can be used to keep the position and margin separate from the main account.
The general calculation for a single position is:
Leverage = Position size / Margin
Calculating leverage
A trader wants to open a 10 BTC position in an account with a 0.5 BTC balance, and wants to know what the effective leverage will be.
Leverage = Position size / Margin = 10 / 0.5 = 20
The position will be at 20x leverage.
Calculating position size
A trader wants to use 0.25 BTC as margin for a position and wants the position to be at 5x leverage. The trader wants to know what position size should be used.
Position size = Margin * Leverage = 0.25 * 5 = 1.25 BTC
The trader should open a position of 1.25 BTC.
Calculating margin
A trader wants to open a position of 5 BTC at 10x leverage and wants to know how much margin to move to the subaccount for the position.
Margin = Position size / Leverage = 5 / 10 = 0.5 BTC
The trader can transfer 0.5 BTC to the subaccount and open the position, which will not affect any other positions on other accounts.
Maximum allowed leverage
The maximum leverage for standard margin users is defined by the Initial Margin (IM) requirement on an instrument: maximum leverage = 1 / IM. Leverage is not available on spot instruments.
For futures and perpetuals, the IM requirement depends on the instrument's tier and on the position size relative to the instrument's Max Amount. Smaller positions can use the tier's full start leverage; as the position grows towards Max Amount, the available leverage decreases. The formula is described on Standard Margin.
For example, BTC perpetuals are in Tier 1: positions up to 5% of Max Amount can use 50x leverage (2% IM), and the available leverage falls to 4x (25% IM) at the full Max Amount.
For the maximum leverage and margin requirements of every instrument at key position sizes, see Standard Margin Requirements by Instrument.
For options (both inverse and linear) the current mark price or index price are part of the initial margin requirements and thus the maximum leverage is variable depending on the option being traded.