Spread Betting on Crude Oil
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Crude Oil prices continue to be high. The Brent Crude Oil (November) market is currently trading at $73.80 - $73.85 with FinancialSpreads.com.
As with many markets, you can spread bet on the future value of Commodities. Eg trading on the Brent Crude Oil (Nov) price rising to more than $73.85 by 12-Oct-07.
Spread Betting on Crude Oil Note:
a) 12-Oct-07 is the settlement date of this spread bet but you can close the bet beforehand if you want to
b) With the Brent Crude Oil market, you trade in $X per point, where a point is $0.01 of Crude Oil movement. eg if your stake was £20 per point and the Crude Oil moves $0.04 then that would be an £80 difference to your profits.
So looking at an example, let's say you see the quote on a spread betting website and it displays a spread of $73.80 - $73.85 and lets say:
1) You feel that the Crude Oil price should go up
2) Therefore you 'buy'. You risk £10 per point
3) The value increases. You run the bet until the settlement day
4) Brent Crude closes at $73.98
5) You bought the spread at $73.85
6) Profits = ((closing level - opening price) / per tick) x stake
7) Profits = (($73.98 - $73.85) / 0.01) x £10 per point stake
8) = (0.13 / 0.01) x £10 per point stake
9) Profits = £130
Nevertheless if the market didn't move as expected and had Oil fallen and finished down at $73.65, then you would have lost money on your investment.
5) Price you bought the spread at $73.85
6) Profits / Loss = ((closing level - opening level) / per tick) x stake
7) Profits / Loss = (($73.65 - $73.85) / 0.01) x £10 per point stake
8) Profits / Loss = (-0.2 / 0.01) x £10 per point stake
9) Loss = -£120
"Spread Betting on Crude Oil" written by RThomas, last updated 11-Jul-2008
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