> ## Documentation Index
> Fetch the complete documentation index at: https://docs.everstrike.xyz/llms.txt
> Use this file to discover all available pages before exploring further.

# Drift: How Moving Strike Prices Affect Perpetual Options

> Drift is the expected hourly intrinsic value change from option strike movement. Combine it with Funding and your price view for accurate PnL projections.

Perpetual options on Everstrike have dynamic strike prices that follow the 100-hour exponential moving average (EMA) of the underlying asset. When the underlying rises, the strike tends to rise with it; when the underlying falls, the strike tends to fall. Drift measures the expected hourly change in a contract's **intrinsic value** that results from this strike movement alone — isolating that one effect so you can reason about it separately from market price changes.

## Reading Drift

Drift tells you how moving strikes are expected to affect intrinsic value, assuming everything else remains equal:

* A Drift of **+5%** means the contract is expected to **gain 5% in intrinsic value per hour** from strike movement alone.
* A Drift of **-5%** means the contract is expected to **lose 5% in intrinsic value per hour** from strike movement alone.

Treat Drift as an **estimate, not a guarantee**. It is a point-in-time value that can change continuously as the underlying moves and the EMA updates.

## Example

Suppose a perpetual option shows a Drift of **-2%**.

If the underlying asset stays completely unchanged over the next hour, the contract is still expected to lose 2% of its intrinsic value — purely because the strike is moving relative to the current underlying price. However, if the underlying asset moves during that hour, that price move can easily dwarf the Drift effect in either direction. Drift isolates one mechanism; it does not predict the contract's total change in value.

## Drift vs. Index Price and Mark Price

Drift applies to **intrinsic value**, not to the contract's market price. On Everstrike, these two concepts are tracked separately:

* **Index Price** is an indicator of intrinsic value — what the contract would be worth based on the underlying price and strike alone.
* **Mark Price** is an indicator of market value — what the contract is currently trading at, incorporating sentiment, supply, demand, and funding dynamics.

Intrinsic value and market value can diverge. Drift may signal a change in intrinsic value while the Mark Price moves in a different direction entirely. Do not assume that a Drift reading predicts the Mark Price's behavior.

## Drift and Funding

Drift and Funding often move together, but they measure different things and can diverge significantly.

When a contract has **negative Drift**, traders are often more willing to short it, since the strike movement works in their favor. That short-side pressure can push **Funding lower** as the market moves toward equilibrium. In that setup, a long holder may lose value through Drift but simultaneously receive value through hourly funding exchanges. The reverse applies when Drift is positive.

Drift and Funding diverge most strongly when a contract trades at a large **premium or discount** to intrinsic value:

* **Drift** reflects the effect of strike movement on intrinsic value.
* **Funding** reflects the gap between market value and intrinsic value.

This divergence is especially common in at-the-money and out-of-the-money options. In some situations it is possible to construct a trade that captures the gap between Drift and Funding — but both values are point-in-time estimates that can shift quickly, so do not assume they will converge on any particular schedule.

## What Drift is Useful For

Use Drift to:

* **Estimate the expected intrinsic value gain or loss** from strike movement over a given holding period.
* **Compare perpetual options contracts** — a contract with favorable Drift has a structural tailwind from strike dynamics.
* **Build more complete PnL projections** that account for strike movement alongside underlying price changes and funding costs.

<Warning>
  Do not use Drift in isolation. Always combine it with your view on [Funding](/trading/funding) and your directional view on the underlying asset. Underlying price movement typically has a much larger impact on intrinsic value than Drift does.
</Warning>