The New York Mercantile Exchange’s light, sweet crude oil futures contract is the world's most actively traded futures contract on a physical commodity. Because of its excellent liquidity and price transparency, the contract is used as a principal international pricing benchmark. The NYMEX also offers trading in heating oil futures and gasoline futures.
Crude oil futures and options provide individual investors with an easy and convenient way to participate in the world’s most important commodity market.
A broad cross-section of companies in the energy industry – from those involved in exploration and production to refiners – can use crude oil futures and options contracts to hedge their price risk.
Light, sweet crude is preferred by refiners because of its low sulfur content and relatively high yields of gasoline, diesel fuel, heating oil, and jet fuel. Even companies that are substantial consumers of energy products can use crude oil futures to protect against adverse price fluctuations.
You can bet on oil price movements using spread betting firms like IGIndex. Oil trades are executed in much the same way as foreign currency pairs, with transactions being made against the US dollar. Due to the nature of trading oil futures, you will notice a number of small differences including market hours as well as denomination and minimum contract sizes. Oil traders should note that margin requirements may change without notice due to market and/or price changes within the individual instrument. Oil traders should also note that leverage and margin are approximations and not exact figures, as margin requirements are standardised. This means that from transaction to transaction, margin requirements will not change while leverage/margin may become more or less favourable.
Financial spread betting is a form of trading where you have the potential to profit from the price movement of a share, index, currency, commodity, option or bond without actually owning it. This effectively enables investors to make potential gains from either rising or falling prices across a wide range of trading instruments.
When you wish to trade on a particular market, you can bet on whether the market will rise or fall over the period of time that you choose to remain exposed to it. For each point or tic that the market rises or falls, you will have the potential to profit or lose typically between £1 or £100 per tick depending on your risk strategy. If you think that the market will increase and decide to buy or “go long” and your prediction proves to be accurate, the transaction will result in a profit. If you think the market will go down and decide to sell or “go short” and you are right, again, you will profit. However, if either of your predictions are incorrect, you make a loss on the overall transaction. There are numerous risks here and you should carefully read the risk warnings of any firm you trade with.
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