Here are the specs Nymex - 500 barrels http://www.cme.com/trading/prd/env/nymex/nymexspecs2760.html Brent - 1000 barrels http://www.theipe.com/~docs/contracts/IPE_BrentCrude_futures_contract.pdf Oil is not my primary trading vehicle, but I do trade it often these days due to the volatility, since it's at all time highs.
You have to do something. For example, you are currently long 25 August Brent contracts and it is going to expire tomorrow. You go to the August/September calendar spread and sell 25 spreads. This will get you flat on your August and long 25 Septembers. You can repeat this process continuously.
Brent crude is a light sweet crude that comes from the North Atlantic region, thus, it's traded on a UK exchange. The light sweet crude that is traded on the NYMEX is West Texas Intermediate that comes from the Gulf of Mexico. They are pretty much the same product just drilled from different regions.
yeah but, if you the price of your long went down, and you closed your position... wouldn't you lose money? what would happen if you just let it "expire?" are is that not allowed?
If you are not a bona fide hedger...more than likely your FCM would A/O you...automatic offset. Your broker would take you out, his firm would A/O you, or you roll. Rolling is still essentially offsetting one position in one month and opening a position in a deferred month. It's not automatic however. You may elect to post full marging and be issued a warehouse receipt for the commodity contract; or settle-up in cash on financials.
very funny, Kicking. actually I did order a book. well, I remember how hellish it was to learn currency trading from the start - almost impossible. yet I went on to learn how to scalp off 1000 points on EUR/USD when that pair moves 75-points in the same time frame, and end flat. I know I could excel in futures trading IF I don't have to close my trade in a specific time period. In forex I can hold a position open for as long as I want. not so, it sounds like, in futures....?
Scalp: Remeber, futures are contracts dude. Like all contracts they have terms, namely a beginning and an end, i.e. your $4500 per month midtown Manahttan annual lease.
It's like getting out of your long and then getting right back in at the same price, but in the next months contract. However, futures are not the same as trading cash currencies and it does cost money to keep rolling your position over and over. If nothing else, you have to pay commissions every time you roll. If you let it expire, since the oil contracts are cash settled, it would be the equivalent of you getting out of your position.