Is there a way to manage gasoline price risk at a smaller quantity than a 42,000 gallon futures contract?

Question

Ideally, I would like to manage gasoline price risk in 5-10,000 gallon increments. I am familiar with futures markets, and in ag commodities they have "mini" contracts -- 1,000 bu vs. the standard 5,000 bu. Just wondering if there are any products available in the gasoline market. I would also be interested in any "new-style" market approaches allowing me to manage a smaller portion of risk. -- I do remember seeing a website at one time that was trying to do this, very early development at the time and don't remember the address.

Answer 1

They also trade crude oil contracts now like stock. USO is the ticker for it. Just like GLD is 1/10th the gold price and SLV is a fraction of the silver price, you can hedge oil prices by trading USO.

Hope that helps!

Answer 2

Intrade.com lets investors bet on the future price of gasoline. Commodity future markets require a margin account and daily settlement, so that avenue can be a hassle. Taking a short position in stocks that are sensitve to gas prices such as airlines stocks can serve as a hedge. ETFs of oil and gas commodities and of oil drillers and refiners is another simple and east approach. If you aren't experienced in trading futures and familiar with the settlement procedures, I would recommend started out with these more simple approaches. Currently the energy markets have been cooling, so you may not want to fully hedge your risk, unless the risks start to increase again. Hurricanes are the biggest risk to gas prices due to the concentration of drills and refinerys along the coast. Just look back at what happened during Katrina, many major pipelines that feed refinerys in the US come from the gulf coast. A potential hedge against storm disruption in the gulf area could be Chesapeake Energy, all of its production in on-shore, thus everytime a threat of a hurricane arises, the stock goes up since they stand to gain from price increases due to supply shocks where they are not at risk to lose production capabilties. Best of Luck to you

Answer 3

One way that has not yet been discussed is to purchase stock in an oil refiner such as FTO or VLO or SU. These stocks trade in tandem with the price of gasoline. So if you purchase 500 shares of FTO at 31.00 should give you a nice hedge. You could also purchase shares in an oil company such as DVN

Answer 4

perhaps you can try forex. which is also excellent way for you to invest.

The FOREX or Foreign Exchange market is the largest financial market in the world, with an volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

try forex from here:

http://www.bernanke.cn/easy-forex/

Good Luck && Wish you make a fortune!

Answer 5

There are "gas-at-the-pump" futures that now trade on the CBOE.

There are mini-versions of these futures that can be traded at a site called http://www.hedgestreet.com

Answer 6

Yes, Do not drive