ENERGY
Selling Crude Oil CFD
A Light Sweet Crude Oil contract (SPT CL) consists of 2000 Barrels (84,000 Gallons), and will be quoted with a spread of 6 cents and a minimum quote fluctuation of $0.01, or, one cent, with a margin requirement $3500 per contract.
A client believes that Oil prices are overvalued and are due to fall in the future. To exploit the situation, the client intends to SELL an Oil CFD.
SPT CL is quoted at $60.45/51 the client sells 5 lots at $60.45 this requires a total deposit of $17500 the client requires a minimum deposit of $3,500 for each position.
Oil prices fall to $59.99/05 the client reacts to the news by BUYING 5 Crude Oil contracts at $60.05 Therefore; the client has made $0.40 per Barrel. If each contract consists of 2000 Barrels, then each cent movement is worth $20 (2000 barrels * 1 cent = $20). In this case, the client has made 40 points profit or $800 per contract. This results in a total profit of $4000 ($800 * 5 contracts = $4000).
The client's gross account balance is now $21,500 ($17.500 original account balance + $4000 trading profit).
1. Sell 5 lots CL@60.45 - Buy 5 lots CL@60.05
|
+ 40 points |
| 2. 2000 Barrels per CFD * $0.01 (minimum movement) |
+ $20 per point |
| 3. 40 points* $20 * 5 (No. of contracts) |
+ $4000 gross profit |
| *Commission charges are NOT included in the above calculations |
|
CFD's based on Futures contracts and quoted 'with expiry' are not subject to further daily interest credits/charges. |
