Cheapest way to bet on crude oil spot prices?

JFonseca said:
I know :( And in the middle of all that talk my post got unanswered and forgotten... still trying to figure out if the way I am trading this oil situation is reasonable or not... to me it makes sense, but I am highly concerned about about etf depreciation due to volatility before oil gets to 40USD
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You would need to look very carefully at what @FoggerMan said. It will take you time to understand it all but it is a very important concept. Same applies to VIX ETFs and other commodities.....
 
FroggerMan said:
If you are bullish on oil long term this would be a way to have exposure while avoiding the "contango" costs. Obviously you would be bringing in other risks such as solvency issues for the particular companies.

In general, I would always recommend investing in the company rather than the commodity.
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Thank you, once again for alerting me about those pitfalls....
 
FroggerMan said:
It's a barrel, not a gallon.

The problem is, unless you are physically storing the oil, you can't just keep the spot price. If you are buying futures, rolling your contract upon expiration will be expensive based on the curve.

Here are the prices for WTI:

MAY 20 22.6
JUN 20 25.71
JLY 20 28.27
AUG 20 29.85
SEP 20 30.87
OCT 20 31.62
NOV 20 32.26
DEC 20 32.79
JAN 21 33.23
FEB 21 33.64
MAR 21 34.04
APR 21 34.42
MAY 21 34.81
JUN 21 35.13
JLY 21 35.4
AUG 21 35.68
SEP 21 35.96
OCT 21 36.24
NOV 21 36.54
DEC 21 36.84
JAN 22 37.06
FEB 22 37.26
MAR 22 37.47
APR 22 37.68
MAY 22 37.9
JUN 22 38.1
JLY 22 38.28
AUG 22 38.45
SEP 22 38.63
OCT 22 38.8
NOV 22 38.96
DEC 22 39.13
JAN 23 39.26
FEB 23 39.41
MAR 23 39.58
APR 23 39.73
MAY 23 39.87
JUN 23 40.03
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Question:

So, if I want to buy one contract of May 20 WTI future, it will cost me $22,600 + commission? Is it for WTI, Blend WTI...?

According to YChart, WTI on 4-20-20 was $36.98?
 
The May contract has expired. The front month contract is June, which is trading at ~$14 x 1,000 = ~$14,000 notional value. The current margin requirement by the CME is $6,400, meaning you would need to only put out $6,400. If the position goes against you you would need to deposit more funds. Unlike a stock, since the price can go negative, there is no limit on how much you may need to deposit so keep that in mind.

Here is the CME's page for WTI: https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

They also have a mini contract that is half the size: https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

It sounds like you may not have much experience with futures though so I would definitely do some research before trading them (as you are doing now with this question).
 
FroggerMan said:
The May contract has expired. The front month contract is June, which is trading at ~$14 x 1,000 = ~$14,000 notional value. The current margin requirement by the CME is $6,400, meaning you would need to only put out $6,400. If the position goes against you you would need to deposit more funds. Unlike a stock, since the price can go negative, there is no limit on how much you may need to deposit so keep that in mind.

Here is the CME's page for WTI: https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

They also have a mini contract that is half the size: https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

It sounds like you may not have much experience with futures though so I would definitely do some research before trading them (as you are doing now with this question).
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Out of curiosity, are you trading oil futures and if so, how is the currebt volatility affecting you?
 
tonyf said:
Out of curiosity, are you trading oil futures and if so, how is the currebt volatility affecting you?
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I don't trade oil or any energy products. There's no particular reason for that other than it's just not what I specialize in.
 
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