Futures and Commodities, step 1 of 4
COM1 Crude Oil Futures
Session timeline
Briefing
Trading30 min
Debrief
The case
Crude oil and its future trade side by side.
Objective
Trade the oil and the future against each other. Assessed on profit and loss.
What it shows
- A commodity future and its spot price: how they stay together.
- The cost of carrying oil as the reason the future sits above or below the spot.
- Trading the gap between two prices for one barrel.
Watch out for
- Treating the future as a separate market when it is priced off the spot.
- Holding a position to the end and meeting the future's settlement.
- The gap that looks large and is only the cost of carry.
Who takes part
- Trader — every student. Trades CL, crude oil, and CLF, its future.
Class size
Ten to forty students in one role. The gap needs two books with activity in both.
Concepts
- Futures pricing
Roles
Trader
You trade crude oil, CL, and its future, CLF.
- Assessed on profit and loss.
Instruments
Crude oil and its future
| Ticker | Name | Market | Students can |
|---|---|---|---|
| CL | Crude oil | Continuous trading | See it, not trade it |
| CLF | Crude oil future | Continuous trading | Trade it |
In the tracks
- Step 1 of 4 in Futures and CommoditiesCrude and its future, with carry between them.