How does Crude Oil Option expiry work?

Commodities
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How does Crude Oil Option expiry work? I know it will be converted to FUT contract but what will be the spot price? Can someone please explain?

Example:
Crude Oil Option April expiry today
Open position: Crude Oil Short 5600 P.E, 3 Lots at 171 Premium
Today’s Crude oil closing price = 5300

  1. What will be the FUT position Strike price if I don’t close my position? 5600-171 (premium)?
  2. And the converted FUT contract will be of April month or May month?
2

@ShubhS9 @Meher_Smaran Can someone please explain?

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Adding to this

image
image1023×465 87.3 KB

So FUT never converges to spot acc to this

@Meher_Smaran @nithin_kumrr @Ragavendran_M

Could you guys tell the exact ticker name of New York Mercantile Exchange’s (NYMEX)# Crude Oil which can be seen on Trading view

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  1. Your future position will be with an average price of 5600. MTM will be adjusted based on the close price of the futures contract.
  2. Devolved futures will be of the April contract.
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5

Did not understand first point? Average of 5600? Can you please explain what will be the FUT in my given example? and what about the Premium sold? 170?

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You already received the premium, so no change in that. You will get a long contract with a buy average of 5600. If the close price of the future contract is 5300, Rs 300 (5600-5300) will be the MTM loss debited.

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Search with “CL1!”.

Spot is WTI.

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  1. at 1:59 you told options are not available on crudeoil mini ; but there are options on it
  2. Rollover costs are too high for NATGAS right ?

At 10:49 PM on 25-04-2025 (Expiry for FUT of NATURALGAS APR)

NATURALGAS APR FUT - 248.9
NATURALGAS MAY FUT - 265.5

So rollover cost → 16.6*1250 = 20750
It is 6.6% of contact value (248.9*1250)

Where as in NIFTY considering -170 basis
So rollover cost → 170*75 = 12750
It is just 0.7% of the contact value (24000 * 75)

So it is too costly to rollover right ??

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9

You are right bro, options are now available on Crude Oil Mini. What was said in the video is outdated.

Also, your calculation about the Natural Gas rollover is spot on. Rolling over Natural Gas futures is very expensive and needs to be done carefully, unlike Nifty where rollover is much cheaper. A lot of players in NG are hedgers (not speculators), so such big roll basis is common.

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:smiling_face_with_tear::smiling_face_with_tear:

So only CRUDEOIL trading makes sense
It exhibits backwardation as of now

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@niftymonk
Any other way where we can trade in spot CFD?

The spread cost is too high in NATURAL GAS making in financially unviable

Isn’t there any way where we can capitalize
the high contango ??

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In India, we cannot trade spot prices directly like people do outside. On MCX, only futures are available. Because of the high contango, it is not easy to make money just by holding. Big players can make use of it because they have storage and delivery options, but for normal traders like us, there is no easy way. Unless you do some smart tricks with calendar spreads, it is very hard. Bro, only big players with storage can make money from this, for us normal trader,s it’s almost impossible.

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