In other words, each of these options offer a less efficient means of profiting, or suffering losses, from speculations made. The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. Thus, options have a non-linear risk-return profile that is best for those crude oil traders who prefer downside protection. In fact, they are the most actively traded future on the market and hence the most liquid. With this type of oil, it's easier for refiners to make products such as gasoline and diesel fuel. NYMEX Crude Options Trading outright futures entails theoretically unlimited risk, relatively high margins and immediate risk upon entry. This video shows you how.
Traders who seeks downside protection in crude oil trading may want to trade crude oil options that are traded mainly on the NYMEX. In return for a premium paid upfront, oil option holders obtains non-linear risk/return not normally offered by futures contracts.
Crude Oil Option Exchanges
When setting up a trade like this, it's always important that we're in the correct contract month and that we're aware of when the different contracts expire. This trade gives him the delta equivalent of being short the WTI contract, but with the added benefit of the positive theta decay as a result of the call options. To add the long Brent component, we simply need to just buy the Brent future. When trading crude oil it's important to pay attention to the price action and market conditions of the Brent crude oil contract.
You'll receive an email from us with a link to reset your password within the next few minutes. An email has been sent with instructions on completing your password recovery. Register today to unlock exclusive access to our groundbreaking research and to receive our daily market insight emails. Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options. Trading Oil Futures The crude oil market is very liquid, exhibits periods of increased volatility, and offers many opportunities for trades.
Crude Oil Benchmarks Before we get into the trades, let's first take a deeper look at the specifics of the products discussed in today's show. Market Conditions As we can see, both products have very similar contract specs and as we might assume, both products are highly correlated.
Trade Ideas Assuming oil has found a bottom and has stabilized within a range, let's explore a few trade ideas. Diversify into metals, energies, interest rates, or currencies. To request permission to trade futures options, p lease call futures customer support at Call us at If your linked margin brokerage account already has sufficient funds, there is no need to make additional transfers to separately fund futures trading.
Conversely, any excess margin and available cash will be automatically transferred back to your margin brokerage account where SIPC protection is available. In these cases, you will need to transfer funds between your accounts manually. S market data fees are passed through to clients.
These requirements can be increased at any time. One of the most important characteristics of any investment portfolio is its diversity Control a large contract value with a small amount of capital.
The Bottom Line
Welcome to WTI Crude Oil Futures Whether you are a new trader looking to get started in futures, or an experienced trader looking for a better way to hedge crude oil, NYMEX WTI Light Sweet Crude Oil futures are the most efficient way to . Crude Oil Futures Exchanges. You can trade Crude Oil futures at New York Mercantile Exchange (NYMEX) and Tokyo Commodity Exchange (TOCOM). NYMEX Light Sweet Crude Oil futures prices are quoted in dollars and cents per barrel and are traded in lot sizes of barrels ( gallons). The Basics of Trading Crude Oil Futures. Share Flip Pin Email Buying a Put Option - Futures Strategy. Here Is a Review of the Online Futures Broker Generic Trade. Learn About Trends in Commodities Trading and How to Use Them. What's the Right Time to Buy a Call Option?