Trading Futures in the Stock Market?

Question

Hello I am a college student utilizing a free trading program for one of my classes. I recently bought Light Crude Oil for 59,800 and the last price was 60,460. I bought 10 blocks of this. So my total was around 604,600. The future i bought was CLV6.NYM and i bought it on 9/26/2006. Im not able to Trade this stock with anyone and im just interested what is goin on with it. Its sitting in my portfolio. Any help would be greatly appreciated

Answer 1

DreDude is correct. You should keep your terminology straight as if you were trading for real and needed info right away, the person you're asking wouldn't understand you. Now, here's why you can't trade it:

CLV6 is the ticker symbol for the October 2006 Light Crude Oil Contract. "CL" is the symbol for crude oil, "V" is the month code (in this case, October) and "6" is the delivery year (2006). The reason you can't trade it anymore is because the contract has expired. The Nov. 2006 contracts are now the "front" or "spot" month. So, if this were real life, what just happened? You held the contract till expiration, and since you said you bought (meaning you're long), you now have to take delivery of 10,000 barrels of crude oil - got $600,000 handy to pay for it?

First of all, I'm surprised your teacher hasn't given you the very basics of futures trading. First, only producers or end-users will hold the contract till expiration to lock in prices or hedge against adverse price fluctuations. As an individual investor, your primary concern is to make a profit, BUT you don't hold the contract until expiration unless you plan on making or taking delivery of the underlying commodity (In this case, crude oil). If you're teacher had fully advised you, you would have sold prior to the close of trading on the expiration day and locked in a 66¢ per barrel profit (60.46 - 59.80) or a gross profit of $6600. But, since you held it till expiration, you need to cough up $604,600 to make the payment for the delivery of 10,000 barrels of Light Crude.

In this case, if you were a refiner, then you would take delivery. You bought at $59.80, but he contract expired at $60.46. You still would need to pay the $60.46 per barrel for crude, but your $6600 profit on the trade offset the additional price increase in the commodity. Is this kind of making sense?

Before you do anymore trading in futures, you need to really understand how they work and what your role as an indivdual speculator is and how individual specs make money trading derivatives.

Answer 2

Whatever program you used to buy this commodities contract, will also give you the ability to check the price.

If it doesn't, just enter another buy order. It will give you the price then. Just cancel the new order.

I don't have the NYMEX quotes, but rather CBOT. In the night session, Crude Oil is trading at $60.875/bbl, down 0.155 cents.

Here's a good website for Oil & Gas
http://www.wtrg.com/index.html

Here's the page for spot prices:
http://www.wtrg.com/daily/oilandgasspot.html

From this website, looks like NYMEX oil closed at $61.03/bbl, down $1.88

Incidentally, keep your terms straight, or they're going to flunk you. This has nothing to do with the "Stock Market" and is traded on a completely different exchange. Oil is a "commodity," not a stock.

You also say you "bought ten blocks of this." They aren't blocks, but are called futures "contracts." Define your terms, and use the correct terminology. This is how you show that you are learning.

You then say you can't "trade this stock with anyone." There's that word "stock" again. Do you know the difference? A "stock" is ownership in a company.

You are controlling 1,000 barrels of oil per contract, so with 10 contracts, you are controlling 10,000 bbl of oil, on margin of about $16,000. Any idea what your leverage is here? It's about 40:1, and like every Novice before you, by any measure, you are way over-leveraged.

Why did you need to buy 10 contracts? Make it as realistic as possible. How much did they give you to start with in your account? Unless you are some multi-billion dollar corporation, nobody buys 10 contracts. A $1.50 move against you and you are wiped out.

Answer 3

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Answer 4

4X trader is right... you've just brought yourself a heap of oil.

Your teacher should have reminded you many, many times in the days leading up to the expiry that you needed to sell October and roll over to November. If this was for real they'd now be out of a job for forgetting to remind you!

Answer 5

I'm not sure exactly what you're asking...do you want the latest quote for it?

If so, you can check here:

>> http://www.nymex.com/lsco_fut_cso.aspx (you should be looking at Nov '06).