Ethanol futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of ethanol (eg. 29000 gallons) at a predetermined price on a future delivery date.
You can trade Ethanol futures at Chicago Board of Trade (CBOT).
CBOT Ethanol futures prices are quoted in dollars and cents per gallon and are traded in lot sizes of 29000 gallons .
|Exchange & Product Name||Symbol||Contract Size||Initial Margin|
|CBOT Ethanol Futures|
(Full Contract Spec)
|USD 6,480 (approx. 14%)|
(Latest Margin Info)
Consumers and producers of ethanol can manage ethanol price risk by purchasing and selling ethanol futures. Ethanol producers can employ a short hedge to lock in a selling price for the ethanol they produce while businesses that require ethanol can utilize a long hedge to secure a purchase price for the commodity they need.
Ethanol futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable ethanol price movement. Speculators buy ethanol futures when they believe that ethanol prices will go up. Conversely, they will sell ethanol futures when they think that ethanol prices will fall.
To buy or sell futures, you need a broker that can handle futures trades.
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