High Premium (Contango): Perpetual trades above oracle. Indicates bullish sentiment, long crowding. Potential short opportunity if extreme.
Deep Discount (Backwardation): Perpetual trades below oracle. Indicates bearish sentiment, short crowding. Potential long opportunity if extreme.
Mean Reversion: Extreme premiums tend to revert. Combined with funding rate, can signal crowded trades unwinding.
Cross-reference: Check funding rate direction. Premium + positive funding = very bullish. Discount + negative funding = very bearish.