July $3.00 RBOB calls settled at $.1090 today ($4578) . If RBOB is at just $4.00 by July, you make $42k . Get after it.
Ok walk me through how I buy this future. Who do I call? LOL. I really know nothing except that gas is going to 4+ a gallon. What do I need? Is the margin 8100 dollars is this what I need to put down to own a contract? Help.
Its fascinating there is a lot less gasoline demand at these levels. One would be able to conclude that with crude at $110 and diesel in shortage, that gasoline would look attractive as at least an export commodity here - we have 15% extra refinery capacity to use. Boy... its going to be a fascinating story. But I think OPEC producers found a way to support higher crude prices --- flood the markets with profit-free gasoline. That way, consumers don't notice expensive crude. I wonder if that is actually a profitable model.
Just so you know, $4 at the pump does not mean that the RBOB contract will be at $4. The intial margin is $8100, this is the minimum you must have on deposit with your broker to enter this position. Any broker that takes you will probably make you put up more than this. Lets say you bought the august contract at the current price of 27159 and lets say it drops 30 cents to 24159. You would have to send an additional $12,600 to your broker to cover your losses. If you don't do this immediately they will exit your position and you will owe them the difference. Any brokerage firm should be able to do this for you, all it will take is for you to deposit the money. Call whomever you currently have an account with. My suggestion: don't do it. Thanks 5yr
Would I have settle each day or each week each month? I know the price can swing. So if it goes down 3 cents one day will I have to send in money that day. What if I put down the 8100 and it goes up 3 cents in a day? What about a mini contract? How do those work? As far as not doing it. Go big or go home has alway been my motto. I bet sports and that is very nerve wracking. This seems like a safer way to gamble.
Yes, gambling is a good word. You have to settle each day. The best thing to do is have more then enough in assets on deposit to cover any losses that may occur. Any broker should take other securities for deposit. So if you have 100k in GE you could use that as your margin deposit and hopefully will not have to meet any margin calls. That way you can hold on to your other investments.
To be honest, if you don't know the answers to those questions, you had better not be trading RBOB. That market is very volatile and tied to oil which is tied to the dollar which is tied to the all kinds of reports and data etc... It is not a market for newbies. Futures are marked to market during the day so that you can get a margin call at any time. As far as a mini contract, I think it is fairly illiquid. As mentioned before, you might want to look at an ETF as a hedge for gas or oil prices.
You will need a large backyard and a shovel, but this is my new hoopty. Backing up is kind of a bitch but she's good on gas. Pretty sweet huh? <a href="http://www.flickr.com/photos/17365089@N04/2331503435/"><img src="http://farm4.static.flickr.com/3027/2331503435_5520cb9151.jpg" /></a>