So I am still continuing my research into electricity futures such as PJM, Ercot, Nyiso, Caiso etc. I have discovered that the margins for many of these contracts can be as low as $8. Since these products can be extremely volatile, I am wondering how it can be that these margin requirements are so low? Based upon the calculations I have done, profit and loss in electricity can be well into the tens of thousands, if not more. Therefore one would expect the margins to be higher. For example the PJM Peco Zone Off-Peak January 23' contract, the margin is only $6. https://www.cmegroup.com/markets/en...day-ahead-lmp-swap-futures.contractSpecs.html Any insight into this matter is appreciated.
%% WOULD it be because the power companies buy so much they prefer that. ??Dont know that market simply quessing [I'm pulling up a chart now , but ''shocking'' /the current copper price/LOL]
Is the volume zero? Most likely, you can't find a broker to trade this product. there are thousands of products with zero volume.
Yes the volume is mostly zero for these swaps. However, I do believe there is much OTC activity for these products.