Crude Oil Futures and Options are Derivatives Contracts that give investors exposure to the international price of crude oil. The underlying Commodity is listed and traded on the New York Mercantile Exchange (NYMEX), a subsidiary of the CME Group. This product serves as a key international pricing benchmark and can be used as an effective hedging tool to manage local users’ diesel price risk. Contracts are settled in rands and can easily be accessed through JSE Commodity Derivatives Members.
Who is this for?
These contracts are the world’s most actively traded energy product. Typically, consumers and producers of crude oil manage crude oil price risk by buying and selling these contracts. Crude Oil Futures and Options are also traded by speculators, who assume the price risk that hedgers try to avoid in return for a chance to profit from favourable price movement.
- Play an important role in managing risk in the global energy sector because they have the most liquidity, most customers and most transparency.
- Easily accessible with a contract traded in rands.
- Enable identification of short- and long-term price and volatility patterns.
- Provide investors with the opportunity to hedge or gain exposure.
- Oil is a highly volatile commodity and sensitive to socio-economic and political factors, which makes investing in oil riskier than many other investments.
How to get Crude Oil Futures and Options
To access Crude Oil Futures and Options, investors need do is register as a client with an authorised member firm, deposit the required initial margin and sell or buy according to their needs.
- No limits apply to individuals, foreigners or corporate entities
- Pension funds and long term insurance companies subject to their 25% foreign allocation limits
- Asset managers and registered collective investment schemes subject to their 35% foreign allocation limits
- For the full details relating to qualifying factors, speak to your broker.