What is certainty worth?
You need liquidity tomorrow, but tomorrow’s spot price is unknown. A reservation charges a fee now for a defined execution price. This example compares that commitment with buying on the spot market.
Try the numbers ↓Separate the fee from execution.
This example charges a reservation fee of 40 basis points and an execution price of 20 basis points. One basis point is 0.01%, so 40 basis points on $1,000,000 is $4,000.
Include a failed delivery.
If the provider delivers, you pay the fee plus execution. If it fails, the demo assumes the fee is lost and you still buy at spot. Change the failure chance to see the cost of that risk.
Compare probability-weighted costs.
Expected cost is the average across the two outcomes weighted by their chances. It is not the bill you are guaranteed to receive. The results also show both actual scenario bills.
Expected reservation cost = success chance × success bill + failure chance × failure bill
A worked example
For $1,000,000, the fee is $4,000 and successful execution costs another $2,000. At 100 basis points, spot costs $10,000. With a 5% failure chance, expected reservation cost is 95% × $6,000 + 5% × $14,000 = $6,400.