Anyone here knows why there is a huge gap in price of CRUDEOIL APR FUT vs MAY FUT?
CRUDEOIL APR FUT = 1778
CRUDEOIL MAY FUT = 2244
This is called massive contango, Contango is a situation where sentiment is that prices will be higher in future(coming days) compared to now, this is common phenomena for most contracts but considering the current situation the sentiment is more phenomenal in crude.
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Thanks @siva! In such cases, by when does the price of the expensive contract come back to normal? E.g. in this case, APR contract expires on Apr 20, while MAY contract expires on May 18. Let’s say the price of CRUDEOIL does not move much from it’s current price by Apr 20 close, will the MAY contract be significantly lower than it’s current price on Apr 20 then i.e. close to 1800?
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@siva It’s means one can easily made huge profit(without any risk) by buying crude oil apr fut and selling crude oil may fut as both futures have almost same price on April expiry ?
First rule in markets -There is no easy money.
There is no guarantee, it is just a bet one has to take, one may win or loose.
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We never know for sure.
May be.
@siva The future converges to the spot prices on expiry. MCX crude contracts settles based on NYMEX Crude oil futures contract.
What is the basis of settlement on Nymex crude oil futures contract ? Where can we get the spot prices for WTI Crude oil ?
Also, to take a position in crude spread contracts; both the current month and next month contract should be available for placing orders. What i have observed is that next month crude contracts are enabled only near the expiry of the current month crude contract - on ground of illiquidity. Can the restriction be removed ?
How to deal with this situation especially for people having long on Apr future contracts and want to rollover…Any option strategy?
Wait so the sentiment is that crude oil stonks are gonna go up?!
Wow, that means cheaper puts. I’m supposed to buy puts on IOC, right?
Why will both the Apr and May futures have same price on Apr expiry? The may futures still has 1 month to go, so if sentiment is that prices will definitely increase by then, the May futures on April 20th will still show a similar difference. Please note that the actual price of oil is reflective of the April contract, not May.
Why the same is not applicable for nifty future?
As we see nifty apr fut & nifty may fut have almost no difference but in crude there is huge difference, will you please elaborate
Both of them are two different asset classes so one can’t compare both. Crude is commodity hence the dynamics around it are totally different. There can be many reasons for the difference anyhow currently the sentiment is people believe the current prices of crude are very low due to corona pandemic and likely demand will rise in future so many are hoarding crude on seas means they are storing it where ever possible. This storage comes at a cost which will be priced in far month prices along with the sentiment that in coming days prices will be higher.
Where we can see Spot price of crude oil
And why zerodha not allowing CO order
Not even option to play why why
$ Terms Cash - CLY00 (Cash)
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