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Ethanol Futures Trading Basics
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.
Ethanol Futures Exchanges
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 (Price Quotes) | EH | 29000 gallons (Full Contract Spec) | USD 6,480 (approx. 14%) (Latest Margin Info) |
Ethanol Futures Trading
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.
Related Articles
- Buying Ethanol Futures to Profit from a Rise in Ethanol Prices
- Selling Ethanol Futures to Profit from a Fall in Ethanol Prices
- Ethanol Options Basics
- Ethanol Call Option Trading Basics
- Ethanol Put Option Trading Basics
- Hedging Against Rising Ethanol Prices with Ethanol Futures
- Hedging Against Falling Ethanol Prices with Ethanol Futures
