ENERGY
Selling WTI Crude Oil CFD
A WTI Crude Oil contract (CL + month code + year code) consists of 1000 Barrels (42,000 Gallons), and will be quoted with a spread of 6 cents and a minimum quote fluctuation of $0.01, or, one cent. The margin requirement is $2000 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.
CL is quoted at $55.45/51. The client SELLS 5 lots at $55.45. This requires a total deposit of $10,000 as the client requires a deposit of $2,000 for each position.
Oil prices fall to $54.99/05 (this means 54.99 – 55.05), the client reacts to the news by BUYING 5 WTI Crude Oil contracts at $55.05. Therefore, the client has made $0.40 per Barrel. If each contract consists of 1000 Barrels, then each cent movement is worth $10 (1000 barrels x 1 cent = $10). In this case, the client has made 40 points profit or $400 per contract. This results in a total profit of $2000 ($400 x 5 contracts = $2000).
| 1. Sell 5 lots CL@55.45 - Buy 5 lots CL@55.05 |
+ 40 points |
| 2. 1000 Barrels per CFD x $0.01 (minimum movement) |
+ $10 per point |
| 3. 40 points x $10 x 5 (Number of contracts) |
+ $2000 gross profit |
CFD's based on Futures contracts and quoted 'with expiry' are not subject to further daily interest credits/charges. |
