Tuesday, September 25th 2018

Question

What are oil futures?

Interesting Question?   (4)   (12)



Answers (1)

13th Nov 2009 by JonB

Oil futures give you the right to buy or sell a certain amount of oil for a certain price, at a certain amount of time in the future. For example, the full size NYMEX oil contract, which trades as CL, gives you the right to buy or sell 1,000 barrels of oil anytime before expiration which occurs on the third thursday of expiration month.

If CL is trading at $150 a barrel, then one contract would essentially be worth $150,000 (150X1000 barrels) at that time (of course the margin for trading it is only around $4,000). If you hold that contract and oil jump $5 and is trading at $155 a barrel, it is now wroth $155,000 or $5,000 more than you paid for it. Which isn't a bad profit considering you only had to put up $4,000 to make $5,000.

There is a mini oil contract as well, but it's not as widely traded.

Like This Answer?   (0)   (0)
This answer is the subjective opinion of the writer and not of FinancialAdvisory.com



11th Nov 2009 In Derivatives 1 Answers | 356 Views
Subjects: oil futures,

Answer This Question / Give Your Opinion
What are oil futures?


Answer: *

What country is this answer relevent to? *
Your Name: *

Enter Verification Number: *


Give Your Opinion
What are the different types of venture capital?
Share a simple answer to help inform others:
Specific to any country?
First name / Alias

• Your answer will be posted here:
What are the different types of venture capital?
Unanswered Questions in Derivatives
Why invest in options?
How to trade futures?
What happens to options when a company goes bankrupt?
What are the different types of warrants?
When do futures markets open?

Answered Questions in Derivatives
How to trade emini futures?
What are futures contracts?
What is strike price in options?
When do futures contracts expire?
What are the different types of derivatives?
Ask A Question
Get opinions on what you want to know:
Specific to any country?