Factsheet on oil
I. Trading in the oil brief
Crude is traded on the NYMEX in New York and London's ICE . To have access to real-time quotes , it is simply to refer to Reuters or Platt's Oilgram Price reports. Crude oil refers to different types of raw considered. However most are Brent North Sea and also the U.S. West Texas Intermediate.
To trade based European , it is better to invest in the morning with Asia and when the NYMEX is open, with the United States until the evening.
One of the main markets for individual investors in the trading of crude oil is the futures market which is bought and sold by the gross lot with delivery between one and six months.
II . Why invest in oil?
Investing in crude oil is a great way to diversify its investment portfolio without taking too much risk . In recent years, in part because of the international geopolitical instability , the price of crude has risen steadily , tripling including prices over the period 2003-2006 . Opportunities exist therefore important benefits .
III . How to invest in oil ?
The easiest way to make significant profits by investing in crude way is to use options on futures contracts . The options work as follows :
If the price of a barrel of oil increases, you have to buy a call option
If the price of a barrel of crude go down, you have to buy a put option
example:
- Consider a futures contract one month in New York trading at 90.50 dollars per barrel
- Either the call option with the same maturity at an exercise price of $ 89.10
- Either a premium to buy a call option in 2650 dollars equivalent to 1,000 barrels of crude oil
Now imagine that the expiration date of the option, or in a month, the price of the futures contract underlying increased by 25 % and is now moving to $ 113.12 . Then if you exercise a call option , you will earn 113.12 dollars per barrel less dollars 90.50 = 22.62 x 1000 barrels of crude = 22625 dollars . If you deduct the premium dollars in 2650 , net profits were U.S. $ 19,975 .
Usually , specialized brokers do not charge any commission on these transactions. The leverage is quite limited , on the order of 20:1, but it can vary depending on the broker and the amount invested . Such leverage has the advantage of reducing the risk exposure of the investor.
IV . Recommendations :
Investing in crude oil is minor risks but yields are relatively limited , except to place an initial capital so . In fact, many investors choose to combine foreign exchange market and the crude oil market . This alliance is quite natural since it allows to take advantage of high yield potential of the Forex market , by investing in commodity currencies like the Canadian dollar, currencies that are just influenced by the price of crude . A good knowledge of the oil market may therefore be a significant asset to invest in Forex.
I. Trading in the oil brief
Crude is traded on the NYMEX in New York and London's ICE . To have access to real-time quotes , it is simply to refer to Reuters or Platt's Oilgram Price reports. Crude oil refers to different types of raw considered. However most are Brent North Sea and also the U.S. West Texas Intermediate.
To trade based European , it is better to invest in the morning with Asia and when the NYMEX is open, with the United States until the evening.
One of the main markets for individual investors in the trading of crude oil is the futures market which is bought and sold by the gross lot with delivery between one and six months.
II . Why invest in oil?
Investing in crude oil is a great way to diversify its investment portfolio without taking too much risk . In recent years, in part because of the international geopolitical instability , the price of crude has risen steadily , tripling including prices over the period 2003-2006 . Opportunities exist therefore important benefits .
III . How to invest in oil ?
The easiest way to make significant profits by investing in crude way is to use options on futures contracts . The options work as follows :
If the price of a barrel of oil increases, you have to buy a call option
If the price of a barrel of crude go down, you have to buy a put option
example:
- Consider a futures contract one month in New York trading at 90.50 dollars per barrel
- Either the call option with the same maturity at an exercise price of $ 89.10
- Either a premium to buy a call option in 2650 dollars equivalent to 1,000 barrels of crude oil
Now imagine that the expiration date of the option, or in a month, the price of the futures contract underlying increased by 25 % and is now moving to $ 113.12 . Then if you exercise a call option , you will earn 113.12 dollars per barrel less dollars 90.50 = 22.62 x 1000 barrels of crude = 22625 dollars . If you deduct the premium dollars in 2650 , net profits were U.S. $ 19,975 .
Usually , specialized brokers do not charge any commission on these transactions. The leverage is quite limited , on the order of 20:1, but it can vary depending on the broker and the amount invested . Such leverage has the advantage of reducing the risk exposure of the investor.
IV . Recommendations :
Investing in crude oil is minor risks but yields are relatively limited , except to place an initial capital so . In fact, many investors choose to combine foreign exchange market and the crude oil market . This alliance is quite natural since it allows to take advantage of high yield potential of the Forex market , by investing in commodity currencies like the Canadian dollar, currencies that are just influenced by the price of crude . A good knowledge of the oil market may therefore be a significant asset to invest in Forex.
