Physical delivery ( CL )

Discussion in 'Energy Futures' started by Surprise, Aug 4, 2010.

  1. Surprise

    Surprise

    I didnt understand this : "(4) "Contract Value" means the amount equal to the settlement price on the last day of trading in a futures contract times one thousand (1,000) times the number of contracts to be delivered, plus or minus any discount or premium set forth in Rule 200.12(C)(2). "

    My question is if i bought ( long ) CL DEC @ 80 $ , and the settlement was 85 $ , should i pay 80$ or 85$ to get the physical delivery ? I pay 80 $ right ?
     
  2. Where do you want your barrels to be sent? BY FedEx or UPS?

    The price you pay is the price you bought the contract. The price you deliver is the price you sold the contract.
     
  3. spd

    spd

    You going into the refining business?
     
  4. U contracted to buy at 80. that is what a futures contract is.
     
  5. local

    local

    If the settlement price is 85 and you stand for delivery, you pay 85. You're account has already been credited the $5.
     
  6. He'll pay $80. He has a $5 "paper profit" or "hedge gain". :cool:
     
  7. Surprise

    Surprise

    Check this :

    http://www.cmegroup.com/rulebook/NYMEX/2/200.pdf

    "SETTLING PRICE: The last settling price shall be the basis for delivery."

    what it means ?
     
  8. Blotto

    Blotto

    +1

    Indeed
     
  9. local

    local

    I believe the original question was "what price would be paid if he stood for delivery". The answer is the answer is the settlement price(85) as opposed to the trade price(80). "On paper" his hedge would show show a price of 80 but on first delivery day all participants standing for delivery would be required to pay the same price, the settlement price or 85. If participants took delivery at their trade price, it would completely undermine the marked to market process.
     
  10. Surprise

    Surprise

    I got the answer from CME : " Delivery price is based on the final settlement price at expiry. So in your example, you would pay $85.00 for physical delivery ."
     
    #10     Aug 5, 2010